Adam Herzog Discusses Non-Compete Agreements with Cafepharma

September 30, 2016

Katz Banks Kumin partner Adam Herzog was interviewed by cafepharma.com for a series of articles on non-compete agreements (NCAs). The first article in the series, published September 30, 2016, entitled, “When You Have to Sign a Non-Compete Agreement,” discussed common provisions in non-compete agreements and ways that these may impact employees. Commenting on employers’ use of NCAs, Mr. Herzog said, “There’s been a strong push-pull lately with employers trying to become more aggressive and state legislatures and officials pushing back. One way employers are becoming more aggressive is by forcing employees farther down the organizational chart to sign off on non-competes.”

Whereas once only CEOs and senior managers would have had to sign such agreements, now employers are more likely to require even the lowest paid employees to sign these provisions.  Mr. Herzog noted that there’s been an uptick in state legislation to address these increasingly aggressive measures. “…[S]everal states, including Illinois, recently pass[ed] laws to prohibit employers from asking low-wage employees from entering non-competes,” he said.

Though NCAs may appear harmless, many are more oppressive than they seem. ” …[A] lot of times employers might try to slip in that you can’t work in an area or industry where an “affiliate” conducts business, or with customers that an “affiliate” tries to pursue. This can be very limiting, especially when you think of the size and complex organizational structuring of some companies, especially pharmaceutical firms.  Who knows how many affiliates or subsidiaries they may have? They may also develop new connections in the future,” Mr. Herzog said.

How do NCAs wind up in court? Mr. Herzog explained, “What usually happens with non-competes is that the employee leaves and knowingly or unknowingly works for a company that the previous employer believes is in violation of the non-compete.” This can lead to serious legal trouble for even the lowest paid employees. Mr. Herzog noted that there are limits to who broad NCAs can be. “Every jurisdiction is different, but generally there are three categories that courts consider. Those are duration, geographic scope, and breadth of the activity that is restricted.”

For more on non-compete agreements, check out the full cafepharma.com interview here.

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