Maryland Court Refuses to Enforce Non-compete Agreement, February 25, 2003
by Eric Paltell
Many employers require sales representatives to sign non-compete and non- solicitation agreements which prohibit them from soliciting clients and working for competitors for some period of time after leaving employment. Although courts will enforce these agreements, Maryland courts require that the agreements not be to excessive in either time or geographic scope.
This principle was recently illustrated in the case of United Rentals, Inc. v. Davison, which came out of the Circuit Court for Baltimore County. United Rentals was in the business of providing rental construction equipment. United had a non-solicitation agreement prohibiting Mr. Davison from contacting United's customers for two years following his termination. The agreement also prohibited him from holding employment with any of United's competitors in the United States or Canada for a period of two years.
When Mr. Davidson went to work for a competitor, United sought to enforce the non-compete agreement. The Circuit Court for Baltimore County refused to enforce it, finding that the 24 month prohibition on solicitation of customers was too long. The Court reasoned that Mr. Davison's replacement should be able to establish relationships with Davison's former client base within 12 months, and applying the non-solicitation clause beyond that 12 month period would therefore be unreasonable. The Court also concluded the prohibition of working for any competitor anywhere in the United States or Canada was too broad.
The United Rentals case highlights the dangers of having a non-compete agreement that is too restrictive. Although such an agreement may discourage employees from leaving employment, courts are reluctant to deprive people of their right to work in their chosen field, especially when there livelihood is based on years of cultivating business relationships. As a general rule, employers should narrowly tailor the geographic scope of these agreements, as well as the types of businesses in which the employee cannot compete, and should also try to keep the length of the agreement to no more than one year.
Workers not Entitled to Travel Pay for Ferry Commute, February 20, 2003
by Eric Paltell
A Washington state court has ruled that workers who are required to take a 20 minute ferry ride to and from an Alcatraz-like detention facility for sexually violent predators are not entitled to overtime pay for their travel time. The court rejected the employees' claim that they should be paid for travel time because they could be disciplined for misbehaving while on the ferry trip.
Although the case was decided under Washington state law, it followed guidelines from the federal Fair Labor Standards Act ("FLSA"). Under the FLSA, time spent commuting to and from the employee's place of work is not compensable. On the other hand, when an employee must report to a worksite first, and from there travel to another work location, the time traveling from the office to the work site is compensable.
This case reinforces the fact that employers may require employees to park off site and walk or take a shuttle to work without paying employees for time spent on the shuttle. So long as the employees are not required to perform any work during the travel time, it is not compensable under state or federal law.
California FMLA Decision Draws Stinging Dissent, February 19, 2003
A federal appeals court in California refused to extend the California Family Rights Act to an employee who traveled to a funeral with his wife, who admittedly was seriously ill. Gradilla v. Ruskin Manufacturing, No. 01-56725 (9th Cir., February 14, 2003). The California act is similar to the federal Family and Medical Leave Act. The court, in a 2 to 1 decision, reasoned that any other result would open up employers to FMLA-type claims every time a sick relative of an employee needed to travel.
The dissenting judge, who obviously has spent little time trying to manage a business, accused the majority of "compassionless conservatism." He further criticized the other judges for treating the California law like a "rigid code," rather than a law prescribing a "minimal amount of humane and decent treatment" to employees with families.
Manager Not a Manager for Overtime Purposes, February 11, 2003
A federal appeals court recently upheld a judgment of nearly $10,000.00 in unpaid overtime and liquidated damages for a salaried car wash manager on the ground that his management duties were slim at best. Jackson v. Go-Tane Servs. Inc., No. 02-1468 (7th Cir., January 21, 2003). The manager, who scheduled, trained, and disciplined other employees, was found to have performed non-supervisory duties nearly 95 percent of his time. More importantly, when the court looked at his effective hourly rate (salary divided by hours actually worked), he made about the same as the employees he supposedly supervised.
EEOC to Undergo Restructuring Under New Budget, February 4, 2003
President Bush has announced that funding for the EEOC will remain at current levels, but the agency is being charged with streamlining its operations. Apparently, the emphasis will be on improving decision-making processes. In the past, the EEOC has been criticized for taking too long to resolve cases. In addition, the agency will reduce office space requirements by 35% and experiment with telecommuting for its employees.
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