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Non Compete Agreements | Business Lawyers in Kentucky
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Non-compete agreements in Kentucky – Landrum & Shouse LLP
In 2014, the Kentucky Supreme Court made it clear that when an employer seeks to impose a non-compete agreement on an existing employee without granting …
Source: www.landrumshouse.com
Date Published: 11/24/2022
View: 353
NON-COMPETE AGREEMENTS IN KENTUCKY
As an employee, your employer may ask you to sign a non-compete agreement. A non-compete agreement is essentially a contract between you and …
Source: www.cwmassociates.com
Date Published: 10/1/2022
View: 8575
A Recent Kentucky Supreme Court Decision Threatens the …
Now, an employer seeking to enforce a former employee’s non-compete agreement must also be able to show that the employee received something of value above and …
Source: www.skofirm.com
Date Published: 10/29/2021
View: 4046
Kentucky non-compete agreements are invalid without …
Covenants not to compete in Kentucky … Non-competes remain legal, val and enforceable in Kentucky if they meet certain requirements. With no Kentucky statute …
Source: www.strauselawgroup.com
Date Published: 7/28/2021
View: 4232
Understanding the basics of noncompete agreements in …
Understanding the basics of noncompete agreements in Kentucky · Duration: Noncompete restrictions typically last anywhere from six months to two …
Source: www.lockabylaw.com
Date Published: 11/8/2022
View: 1777
Are non-compete agreements enforceable in Kentucky?
Kentucky does not have an across-the-board ban on non-compete agreements. The enforceability of any such contract depends entirely on its …
Source: www.nichfirm.com
Date Published: 3/4/2021
View: 3059
Kentucky Non-Compete Agreement Template – eForms
A Kentucky non-compete agreement restricts a person’s ability to work in a specific business industry for a duration and geographical area.
Source: eforms.com
Date Published: 11/18/2022
View: 1622
Non-Compete Laws: Kentucky – Practical Law
A Q&A gue to non-compete agreements between employers and employees for private employers in Kentucky. This Q&A addresses enforcement and drafting …
Source: uk.practicallaw.thomsonreuters.com
Date Published: 1/12/2021
View: 2355
Non-Compete Agreements in Kentucky
In 2014, the Kentucky Supreme Court made it clear that when an employer seeks to impose a non-compete agreement on an existing employee without …
Source: www.ccgattorneys.com
Date Published: 4/12/2021
View: 2402
Non-Compete Agreements Attorneys in Northern Kentucky
In order for non-compete agreements to be enforceable, they must stipulate the specific region where a person is not permitted to work or compete. The …
Source: gatlinvoelker.com
Date Published: 11/13/2022
View: 492
Non-compete agreements in Kentucky: when are they enforceable?
Non-compete clauses in Kentucky: when are they enforceable?
In a lively corporate culture characterized by intense competition, non-competition clauses are generally not approved by the courts. In fact, in California and some other states, state law prohibits the use of non-compete clauses.
What about Kentucky? In a major 2014 ruling, the Kentucky Supreme Court clarified some aspects of the non-competition clause. However, many questions remain about the enforceability of such agreements under Kentucky law for both employers and employees.
In this article, we will address some of these questions.
Existing employment relationship without new consideration
In 2014, the Kentucky Supreme Court clarified that if an employer attempts to impose a non-compete obligation on an existing employee without providing additional consideration, the agreement is unenforceable. The case was called Charles T. Creech, Inc. v. Brown.
In the Creech case, a company that supplies hay and straw to horse farms in Kentucky asked a longtime employee to sign a “conflict of interest” document that was not part of his employment contract. When the employee transferred to work for another company in a similar business, his former employer claimed he had broken an agreement not to work for a competitor within three years of leaving.
The Kentucky Supreme Court held that this agreement was unenforceable because the employee received no consideration for signing it. According to the court, continued employment in the company is not a consideration for an enforceable non-competition clause.
change in working conditions
What if an employee receives additional benefits of some kind in return for signing a non-compete agreement? For example, an employee could receive a promotion, increased training opportunities, or a raise in salary.
The Kentucky Supreme Court, in its Creech ruling, noted that it is a different case when a non-competition clause accompanies such a change in employment. This applies regardless of whether the non-competition clause is designed as an independent agreement or as part of an existing contract.
Solicitation and Non-Disclosure Agreements
The enforceability of a non-competition clause may also depend on the nature of the industry. Some industries are much more open than others to sharing information, making them less amenable to the constraints of poaching or non-disclosure agreements.
For example, an industry such as information technology staffing is not generally based on strong confidentiality safeguards. Companies in this industry often share their job openings with multiple IT companies and information about job applicants is readily available on LinkedIn.
Get the legal advice you need
In short, non-compete enforceability law is evolving rapidly, both in Kentucky and across the country. It is important to get knowledgeable legal advice to move you forward.
NON-COMPETE AGREEMENTS IN KENTUCKY
As an employee, your employer can ask you to sign a non-competition clause. A non-competition clause is essentially a contract between you and your employer in which you agree not to participate in any “competition” during or for a specified period after your employment. The purpose of such agreements may be to protect the employer’s confidential information and trade secrets, to protect the employer’s relationship with its customers, or to protect the investment of money and time spent by the employer in training the employee.
Although non-competes are valid and enforceable under Kentucky law, they must not place an undue burden on the employee. Therefore, several clauses in the non-compete agreement drafted by your employer may be unenforceable if found to be inappropriate by a court reviewing the agreement.
Generally, a non-compete agreement requires that the employee neither work for a competitor of his employer nor establish a business that involves work similar to that performed by his employer, either during employment or for a period after employment. However, non-competition clauses that are too broad are not “appropriate” in the eyes of the court. For example, it was decided that a non-competition clause must not be unlimited in terms of time and place. Hammons v. Big Sandy Claims Serv., Inc., 567 S.W.2d 313, 315 (Ky. App. 1976) (citing Calhoun v. Everman, 242 S.W.2d 100 (Ky. 1951). The reasonableness of an agreement may also vary depending the type of employment or industry To ensure that a non-compete clause is appropriate and therefore enforceable, it is important for an employee to have it reviewed by a trusted employment attorney such as that of Charles W. Miller & Associates .
Some non-competition clauses are concluded at the beginning of the employment relationship, others only after the beginning of the employment relationship. Even if a non-compete clause passes the “reasonability test” described above, the employer must still give due consideration to the employee’s non-compete clause when presenting the agreement to the employee post-employment. In a landmark case, Charles T. Creech, Inc. v. Brown, the Kentucky Supreme Court ruled in 2014 that an employer may not impose the restrictions contained in a non-compete agreement on an existing employee without providing additional consideration. Charles T Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014). The court ruled that “continued employment” alone is no longer adequate consideration. Rather, the consideration must be something of added value in exchange for a promise not to compete with the employer. If the court finds that the non-compete agreement lacks this consideration, it may be declared unenforceable.
Charles T. Creech, Inc. v. Brown also ruled that consideration shouldn’t just come in the form of a raise, a one-time bonus, or a promotion. The court found that an employer providing a worker with specialized training or expertise that the worker may not have acquired elsewhere may also serve as sufficient consideration to support the enforceability of the non-competition clause.
If you or someone you know has a non-compete issue, attorneys at Charles W. Miller & Associates are here to discuss its enforceability and your legal options. Contact our office at 502-273-0234 for a consultation.
A Recent Kentucky Supreme Court Decision Threatens the Enforceability of Non-Compete Agreements
by Joseph Bilby
In June, the Kentucky Supreme Court made an important and unexpected judgment in Charles T. Creech, Inc. v. Brown. Employment attorneys at Stoll Keenon Ogden PLLC have prepared this SKO Client Update summarizing the Creech decision and how it could affect your business.
Why should I be concerned about this new decision?
The Creech decision could affect a Kentucky employer’s ability to enforce non-compete, non-solicitation and similar agreements signed by its current and former employees. Previously, an employee’s agreement not to compete with his employer was considered valid, binding and enforceable so long as his terms were reasonably tailored to protect the legitimate business interests of the employer – rather than far-reaching and possibly excessive ones for the company Impose restrictions on the worker’s freedom to earn a living. The Kentucky courts held that mere continued employment provided sufficient “consideration” for the employee to support a binding contract.
Now, an employer wanting to enforce a former employee’s non-competition clause must also be able to show that the employee received something of value beyond continued employment for signing the agreement. If the employer cannot show that the employee received consideration for promising not to compete with the employer, the employee may be able to convince the court that the non-compete agreement is not “reasonable” and unenforceable.
How is Creech changing the law regarding my company’s non-competition clause?
Historically, many Kentucky attorneys and judges have considered a person’s continued employment of sufficient value to constitute sufficient “consideration”—the consideration required by law for any valid contract. According to Creech, that may no longer be the case.
Creech bought into a hay and straw merchant (Creech, Inc.) who hired someone experienced in the hay business. After sixteen years of employment, Creech, Inc. required the employee to sign a non-competition and non-disclosure agreement. No one told the employee that continued employment was conditional on signing the agreement, and the employee received no financial compensation for signing the agreement. In the years following signing, the employee was not promoted, trained, or given a raise. Based on these facts, the Supreme Court ruled that the employee had received no consideration for the agreement and therefore Creech, Inc. could not enforce this agreement after the employee terminated his employment.
How do I know if my company’s non-competition clauses are vulnerable?
The key question after the Creech decision is whether your company’s employees received anything of value for signing a non-compete agreement. Many employers already pass this test by offering their employees one or more specific benefits in exchange for their agreements, either at the time of signing or shortly thereafter: hiring for a new position, additional compensation, promotion, obligation to provide additional services, or specialist training , labor protection and so on.
What can I do to protect my company’s interests in light of this new decision?
Going forward, employers would be wise to review their existing non-competition clauses to ensure Creech’s involvement will not cause problems should they require court assistance to enforce their rights.
Given the importance of non-compete agreements and other restrictive agreements in protecting a company’s most critical assets – customers, employees and intellectual property, to name a few – this is a situation where a regular “check” with legal counsel may be appropriate be. If your company has not recently reviewed its non-compete agreements with legal counsel, or you are concerned about the impact of the Creech ruling on the enforceability of your company’s non-compete agreements, SKO employment attorneys would be happy to speak to you.
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