This morning my precious child pranced around our kitchen in a tutu, with a fairy wand. She tried to grant our cat Earl three wishes by tapping his head with the wand. I think he wished for her to leave as the plastic star fell upon his head rather aggressively. Sadly, she didn’t quite sense his wishes involved personal space, and kept at it until he ran away.
At one point, she looked at me, twirled and asked “pretty?”
“Oh bug,” I exclaimed. “You are so beautiful inside and out. You are so strong and sweet. I love you sweet girl!” * (Clearly trying my best to get away from focusing on outward beauty but wanting to present the appropriate level of enthusiasm).
It used to be that Virginia judges, when asked to decide whether a restrictive covenant in an employment agreement was binding, reasonable and therefore enforceable, would read the agreement, catch up on Virginia law and decide as a matter of law whether the contract was on its face reasonable.
Now, a shift has occurred where most judges are requiring discovery and evidence between the parties to determine in context of this employee, this industry, this document etc., whether the covenants are reasonable. While I get that context and information is helpful, what it means practically for our clients is that we no longer have access to the courts to determine the validity of a contract without expensive and time consuming evidence gathering. Depositions, written discovery, it all takes time and money.
So what used to be a simple or straight forward process (in theory) is now prolonged, anything but straightforward, and at least 6-9 months in the making.
So how on earth does all this link to my little fairy godmother?
What if, when asked whether my daughter was pretty, I had responded “So sorry bug, I’m not sure yet. I need to examine the tutu fabric, or hold the wand for a few minutes to study its glimmer, then I’ll be able to answer your question.” Don’t you think my need for further information would elicit a tantrum, crying fit or worse, general sadness? I do.
And that response is not dissimilar to what happens when our clients are told, “so sorry, while common sense and Virginia law clearly dictate your contract is overbroad and unreasonable, we have to waste months of time and money on discovery before the judge will determine the contract is overbroad and unreasonable.”
There is very little I can do about this new trend in Virginia courts. I can advise my clients to the reality of their options and complain on my soap box about judicial economy. Very few will listen and even fewer will care.
When asked however by a darling little girl for an observation, or affirmation – I will answer immediately, and with great gusto. I may even waste one of my three wishes tomorrow on this recent legal development. Who knows, maybe it will work. I wish, I wish, I wish!
Take a moment to access this Bob Dylan Cover of The Times they are a changing.
Now, with that well known folk sound in the background I will make my brief but important point about Virginia Non-Compete law or rather Virginia Business Tort law: The law, it is a changing.
A few weeks ago I wrote about a federal decision where the Court held one company could be liable for tortious interference of contract when it hired employees they knew had a restrictive covenant. I even went so far to express my disagreement with the Court’s analysis or, more generally, the application of tortious interference to at will employment relationships.
Then, today, as I opened my Virginia Lawyer’s Weekly, I read that 4th Circuit Court of Appeals (the boss court of the federal court earlier referenced) just held in a different case that a Maryland Company could not sue the company that hired its CAO for tortious interference with contract.
Why not? Because the timeline of events and evidence showed the offer of employment was made before the employee notified the new potential company he had a contract. Then, employee quit. Then company #2 hired him and at that moment he was breaching his contract. The interference was not the offer of a job, but the job itself – and that occurred after he resigned.
I know, confusing.
But I think where this court is going makes sense.
Is a job offer (regardless of whether offering company knows potential employee has a non-compete) tortious interference?
Of course not. Its an offer.
Is employment of a person, not knowing they have a non-compete, tortious interference? I have yet to see a Virginia judge say it is, or that the employer had a duty to ask to protect the company from such a claim.
Is employment of a person you know has a non-compete, tortious interference? One federal Court in Virginia says maybe. The 4th Circuit Court of Appeals says probably not.
As the song says – Mothers and Fathers, ”don’t criticize what can’t you can’t understand.”
I won’t criticize. I will simply point out that even business tort law is evolving. Duties of employers and employees is always changing and as Virginia law changes and bends, I will do my best to advise clients how to act and behave in such a way that they can avoid litigation and go about their business.
How about greed and the desire to underpay skilled employees. The answer to the question was revealed due to a class action lawsuit filed by 64,000 programmers and engineers who accused these companies of conspiring not to raid one another’s workforces in the interest of stifling competition and suppressing wages. The lawsuit uncovered the fact these Silicon Valley Kings secretly forged no-recruit agreements between 2005 and 2009. The evidence of their dirty little agreement was buried in numerous emails. My favorite was sent by Google CEO Eric Schmidt. It appears Schmidt instructed one of his minions to verbally advise other Google employees of the agreement not to raid another’s workforce as he did not want to create “a paper trail over which we can be sued later.”
Each company agreed not to recuit the other company’s employees because to do so would drive payroll costs upward for all of the companies…or as I like to say, to a fair market level of compensation.
At first glance the fact these companies agreed to settle this antitrust hiring case by paying $324 million seems to be a significant. $324 million is a lot of money….unless it is being paid by Apple, Google, Intel, and Adobe. It is important to keep in mind that $324 million is only 0.4 percent of the companies’ combined revenue for the most recently reported quarter!
My Take: The dirty little agreement reached by these companies is the worst possible non-compete scenario. Companies should pay employees based upon what is fair in the market place, free of collusion and non-compete agreements which hurts everyone in the long run.