Violating Non Compete Agreements
Violating non compete agreements typically results in injunctive relief or monetary damages for the plaintiff, Frequently used in an employment context.3 min read
Violating non compete agreements typically results in injunctive relief or monetary damages for the plaintiff. Frequently used in an employment context, a non-compete agreement is a proviso under which someone agrees not to work for a comparable business or operate in competition with someone else, typically the previous employer.
- The most frequently requested and granted relief for violating a non-compete agreement is an injunction.
- As a result, the previous employer typically does not attempt to determine whether there are damages.
- Alternatively, a previous employer often requests that a judge upholds a non-compete agreement and forces the worker to leave their new employer.
- Former bosses sometimes look for damages –- typically against their former worker.
- Compensation is a common form of damages or compensation for loss of profits as a result of the violation.
- Cambridge Engineering, Inc. v. Mercury Partners 89 BL, Inc is a case where monetary damages were awarded.
- For monetary damages to be granted, there must be evidence of a veritable loss. This loss can vary from small amounts to significant amounts, according to the evidence of damages presented by the employer to the judge.
Punitive damages is another common kind of damages and are awarded for vindictive behavior. Punitive damages necessitate clear proof of this intentioned, vindictive conduct. Malicious behavior is necessary in order to substantiate a claim, so if such a claim is satisfied, punitive damages will be made available.
- Another relief option for the breach of a non-compete clause is liquidated damages.
- These are stated in a contract as the sum, or a formula for producing an exact sum, that one party to a contract will pay for violating that contract.
- In the case of liquidated damages, an employer can list a sum that their worker must pay if they violate the non-compete contract with their boss.
- As liquidated damages are a component of the contract, a new employer will not be required to pay liquidated damages, unless the employee signed an agreement with their previous employer.
- A judge will need to decide whether a liquidated damages clause is appropriate before asking a party to pay the damages. The sum of money depends on the situation.
Court Costs and Attorney Fees
Ultimately, the unsuccessful party could be held accountable for court fees and the cost of hiring an attorney. This will be contingent on whether the victorious party requests these damages and whether the court thinks that the successful party's conduct justifies them paying for these fees.
Previous Court Outcomes
Typically, it is hard to show that a non-compete contract is enforceable. In most cases, the court has concluded that the non-compete agreement was not enforceable. For example, in Lawrence v Allen, Inc v Cambridge Human Res. Group, Inc, it was found that there was no lawful business goal and disproportionate limitations. In Northwest Podiatry Ctr., Ltd. v. Ochwat, the court concluded that there was ambiguity and that the terms of the agreement were too broad.
In Capsonic Group v. Swick, it was found that there was no lawful business goal. Meanwhile, in other significant cases, the courts concluded that there was not enough consideration given and that limitations were too heavy and unreasonable.
Monetary Damages Previously Awarded
In situations where former employers have won in the courts, the sums paid out have ranged from $7, 313.72 to $138, 000. In Cherne Indus., Inc. v. Grounds & Associates, $49,322.50 was awarded against previous staff members, who had founded their own business on the basis of industry secrets and customer lists taken from their former boss. And in Raymundo v. Hammond Clinic Ass'n, a sum between $15,000 and 25,000 was awarded in accordance with a liquidated damages proviso.
The sums of money awarded can range from minimal to very high, depending on the loss that the previous employer experience and can provide evidence of. In
Noncompetition Agreements in Employment
Typically, employers ask their workers to agree to noncompetition contracts, which are also known as restrictive covenants. According to Michigan Law (MCL 445.774a), such agreements can be enforced if they are found to be appropriate.
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