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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Employment Law
Satisfied Customers: 111593
Experience:  20+ Years of Employment Law Experience
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Hi, This question is follow up for my previous question where contracting company sent me legal notice to pay liquidated damages for not joining company after signing employment agreement. I have following clause in my agreement. Non-Competition. From
the Effective Date, during the term of the Employee’s employment with the Company and for a two (2) year period upon its termination, Employee shall not, for any reason, (i) contact or solicit, directly or indirectly, the Customers of the Company for purposes
of providing services or selling products to the Customers, (ii) provide services or sell products, directly or indirectly, whether as an employee, contractor, vendor, owner, partner, investor or agent to the Customers of the Company, (iii) market or advertise
the services or products of any other individual or entity to the Customers of the Company or (iv) interfere with or attempt to interfere with, whether or not for his/her own benefit, the services provided by the Company to its Customers. Effective date is
date when I actually Signed Contract. If I do not join contracting company, Ideally I will not be there employee. Will above clause applicable to me ?
Submitted: 1 year ago.
Category: Employment Law
Customer: replied 1 year ago.
Please let me know if you need contract copy.I signed contract and decided not to join company.
Expert:  Andrea, Esq. replied 1 year ago.
Hi, My name is ***** ***** I will be glad to Answer your question, but need a bit of clarification, if you do not mind, Is the "employer" seeking damages because you did not fulfilll the employment agreement by not starting your employment with them, or are you being sued for violating the Noncompete restrictions in the agreement ?
Customer: replied 1 year ago.
Hi Andrea,
Thanks for your reply. Let me explain you situation.1. Contracting company from Michigan offered me job. I signed employment agreement with them. They did not invest single dollar on me. They have following clauses1. If I break contract, I am liable to pay $10000 dollar. I got legal notice to pay same.2. Non Competitive clause ( explained above)3. Non Solicitation clauseAll clause start with statement "From effective date, during term of employment with company".I have not joined employer. He sent me notice to pay liquidated damage.I am worried about non competitive and non solicitation clauses now. If I join another company tomorrow, will they sue me for non competitive and non solicitation damages.?Right now, they just need liquidated damages which is $10,000.I am worried, to pay huge amount? Even If I pay to close matter, is there any chance they will come back for non competitive and non solicitation clauses.If Yes, Ideally I will not able to join any company in future and seat in home, just because I signed agreement with employer. I have decided not to join him as he already sent notice for liquidated damages.
Expert:  Andrea, Esq. replied 1 year ago.
Thank you for your reply and your additional information. If I understand you correctly, you are asking if the employer with whom you signed the agreement can claim both liquidated damages of $10,000, as well as damages for violating the subsections of the agreement relating to non-compete clauses. You also stated that the employer has not incurred any expenses relating to hiring you as an employee. And, basically what you are asking is, if the employer were to sue you for breach of contract could he claim both liquidated damages of $10,000 as well as damages for violating any of the Non-compete subparagraphs. The Court would likely do the following – Regarding the $10,000 damages for breach of contract, Courts have awarded to the employer the amount stated in the employment agreement which is $10,000 in your situation. The Court will generally award this amount to the employer, if the Court finds the amount reasonable. The employer would not have to itemize his damages and have them add up to $10,000 because the Courts have taken the view that both the employer and the employee are adults and knew what the consequences of breaching the contract. The Court will not require the employer to itemize his damages and have them add up to $10,000 before it awards that amount to the employer because Courts take the position that both parties to the contract were adults and capable of entering the contract. If either the employer or the prospective employee had any doubts about any clause in the agreement, they would have clarified or explained it in the agreement itself, and since neither party felt the need to clarify anything, then by signing the employment agreement, they both mutually agreed that no explanation was required by either party. Your statement that the employer did not spend any money on you would be interpreted by the Court as – the employer incurs costs in finding an individual to fill the position which he is trying to fill and because the employee is not aware of the actual costs or things on which the employer incurred these expenses, does not negate the fact that the employee agreed to this amount as liquidated damages. If the employer finds it necessary to sue you in order to collect this amount, you could certainly demand that the employer prove to the Court how he incurred $10,000 in damages. But, keep in mind that the Court also knows that an amount is specified in the contract as “liquidated damages” in order to save the Court’s time in calculating damages, and that if one of the parties objected to this amount, or would want an itemized list of the damages, that party would have spoken up before signing the employment agreement and would have demanded that this section be modified somewhat to reflect “actual” damages incurred by the employer, or state the requirement that the employer furnish an itemized list of actual damages when enforcing that part of the agreement. If the employer sued you and tried to enforce that part of the agreement - You can certainly demand an itemized list of damages which the employer incurred and which would justify the $10,000 liquidated damages the employer is demanding; You could then refute the items on the emloyer’s list, item by item to prove that he did not actually incur these costs and expenses. As for enforcing the Non-compete portions of the Employment Agreement, the employer can demand that he Court award him all the profits you earned and which the employer lost by breaching that section of the Agreement. If the Court finds that the restrictions placed on the employee are reasonable with respect to time and geographic location, they will enforce the restrictions. For example, Courts have held that a time restriction that is three years or less is reasonable. As for the geographic restriction, the reasonableness would depend on how far the employer’s business extended. For example, if the employer did business all over the globe, the Court would find it an unreasonable restriction if the Non-compete referred to the entire world as the geographic area where the employee could not engage in a competing business. The Court might restrict the geographic area by a more reasonable designation such as a State line, or “west coast, “East coast”, or “Midwest”, etc. If the employer appears to be moving in the direction of filing a lawsuit against you, it would be to your benefit to try to reachan amicable out of Court settlement with the employer because historically, Courts have upheld these agreements based on the principle that these agreements promote a ”smoother” area for businesses to operate. I wish I could have given you a more favorable Answer, but I know you came to JustAnswer because you know that you will receive a correct Answer and will be able to plan your steps more accurately and with the least possible cost to you. If you have additional fact which you would like me to consider and which might change my Answer, please let me know and I will be glad to consider these additional facts. Please be kind enough to leave a positive rating, it is very much appreciated, Kindest Regards, ANDREA
Expert:  Andrea, Esq. replied 1 year ago.
I do not believe that there is anything that I can add to my Answer. So, I am going to respectfully ***** ***** of your question, ANDREA
Customer: replied 1 year ago.
HI Andrea,
Thank you for your reply. I apologize to ask you one last doubt which is unclear to me.If I just have signed employment agreement and did not join company, I will not be there employee. If I join new employer from another state, will non competitive and non solicitation clause applies to me? I did not work even for single day to employer with whom I signed employment agreement.Sorry to trouble you once again.
Expert:  Andrea, Esq. replied 1 year ago.
No trouble at all. Thank you for giving me the opportunity to clarify and explain my Answer. The employment agreement and the damages and Non-Compete clause still apply to you because once you signed the Agreement, it became enforceable by both sides - you as well as the employer. You "joined" the company when you signed the employment agreement and from that point on, all parts of the Agreement are enforceable by the employer against you. Even if you join another employer in another State, all parts of the agreement you initially signed are binding on you, ANDREA
Customer: replied 1 year ago.
Thank you.I signed employment agreement on 15th May 2015. I got offer letter on same day having start date : 30th June 2015. Employer and I have signed offer letter as well.
I am here on H1B visa and this employer legally do not hold my visa.How will they consider me as their Joinee.Could you please tell me , which date will be considered to enforce non competitive clause? Date on which I signed agreement or start date mentioned on Offer letter?If start date is considered, I am not their employee as they did not file my H1B visa for employment with them.
Expert:  Andrea, Esq. replied 1 year ago.
Which employer helped you to secure you H1B visa ?
Customer: replied 1 year ago.
I am with My current employer who got approval of my H1B visa in Jan 2015. Employer who sent me notice do not hold my H1B visa. we just signed agreement ( 15th May 2015) and offer letter ( start date there is 30th June 2015). Could you please let me know how effective is non competitive clause for second employer? I do understand that I owe Liquidated damage to second employer. I don't understand how non competitive and non solicitation clause is applicable in this case?I am planing to join third employer which is in midwest. Second employer is from east coast. I am worried if second can sue me to join third employer.
Customer: replied 1 year ago.
Can I please have answer to my above question.
Expert:  Andrea, Esq. replied 1 year ago.
Your question is difficult to Answer because some of the facts you stated are confusing ?
1. First, referring to the employer with whom you signed an employment Agreement in May, 2015 and scheduled to start June 30, 2015, you had to have had some type of visa which authorized you to work in the United States, otherwise the employer would not have offered you employment, is that correct ?
2. You stated that the above employer (referred to in question 1, above) does not “hold” your visa. Which employer offered you the employment on which you were granted your H1 Visa ?
Customer: replied 1 year ago.
I came to Us on H1B visa with employer 1.
Employer 2 offered me new role . He asked me to sign agreement and offer letter. He agreed to file H1B extension with USCIS. Agreement sign date : 15th May 2015 . Joining Date : 30th June 2015.Later on I asked employer 2 not to start process. Hence he sent me legal notice for liquidated damage.As of now I am employee of employer 1 ( Who hold my visa).Employer 2 is my future employee.Due to some personal issue, I will join him.Employer 2 have lots of terms in agreement.If I join Employer 3 who is interested to hire me, Can employer 2 create any issue ? He hold only agreement. My visa is with employer 1. Employer 3 will file my H1B extension with reference to approval of H1B visa of Employer 1.How effective is non competitive term of employer 2 is applicable? He just have employment agreement with him.Request you to reply.
Customer: replied 1 year ago.
Did not Typo in above statement . Please find updated case notes.I came to Us on H1B visa with employer 1.
Employer 2 offered me new role . He asked me to sign agreement and offer letter. He agreed to file H1B extension with USCIS. Agreement sign date : 15th May 2015 . Joining Date : 30th June 2015.Later on I asked employer 2 not to start process. Hence he sent me legal notice for liquidated damage.As of now I am employee of employer 1 ( Who hold my visa).Employer 2 is my future employee.Due to some personal issue, I will not join him.Employer 2 have lots of terms in agreement.If I join Employer 3 who is interested to hire me, Can employer 2 create any issue ? He hold only agreement. My visa is with employer 1. Employer 3 will file my H1B extension with reference to approval of H1B visa of Employer 1.How effective is non competitive term of employer 2 is applicable? He just have employment agreement with him.Request you to reply.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I am a different contributor and look forward to working with you to provide you the information you are seeking for educational purposes only.
You are asking the same question the previous expert answered. The previous expert was correct in telling you that if you signed the contract you would be held bound to that contract. The reason written contracts are used in the US are to bind people to agreements they made and for you or anyone to sign an agreement and then want it to not be enforced as written would mean such written contracts would be meaningless and useless.
So, Employer 2's agreement that you signed would still be binding on it because you signed it agreeing to it.
Customer: replied 1 year ago.
Hello Sir,
Thanks for your input. I understand your point. But If employer 2 is not my employer at all ( he don't hold my H1B), will non compete and non solicitation will still apply. I did not work even for single day with him,
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.You signed a contract with him, whether you showed up to work with him or not, you signed the agreement and that is what makes you bound to him and makes the contract enforceable. If you did sign the contract then that means you intended to be bound by it, if not the contract would be meaningless. He has a claim because you signed the agreement I am afraid.
Customer: replied 1 year ago.
Thank you. Please help me understand following scenario1. Employer 2 ( singed only contract but did not work even for single day) is in Michigan, client is in North Carolina. I was supposed to work at client location.2. Employer 3 ( Got approval of my H1B, will start working soon) is in Florida. I will work from Florida from employer's office.If employer 3 client is different than employer 2, how effective is non competitive and non solicitation clause apply?employer 2 wanted to hire me for client A. Employer 3's client is Client B. Client B do some business with Employer 2.Since employer 3 is asking me to work from Florida, how effective is non compete and non solicitation clause is applicable?
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
You say "but did not work even for single day" like that makes a difference once you signed the contract. It does not make a difference. If you did not want to work for Employer 2, then you had no business signing the contract. Once you signed the contract you have given employer 2 the basis to pursue you even if you did not work for one day because you signed the contract with them. Again, if not, the contract you signed would be worthless and why bother using one, that is not the case.
The non-compete clause is applicable, so is the damage clause, because you agreed to it I am afraid.
Customer: replied 1 year ago.
Thank you.I completely understand I have signed contract and all terms are applicable. I will not work for employer 2.can you please answer my question to understand effect to non compete and non solicitation clause in following two scenarios1. If I work for employer 3 which is in different state than employer 2 . Both have different client. Does non compete clause applicable? Employer 3 client is no where related to employer 2 .2. If employer 3 hire me for client B. Employer 2 wanted me to work for client A. Client B is also client for employer 2.
I do not have any confidential information of client B thru employer 2. I would be working entirely in different state for client B. How effective is non compete clause now.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
1) The non-compete forbids you from working in any business or position where it would compete with employer 2. If employer 2 does not do business in FL and thus you would not be competing with them in FL, then it would not be a violation of the non-compete.
2) It is not a violation of the non-solicitation, because you did not go after the client to solicit them. The problem is that if you are working for Client B who also does business with Employer 2, that would be where the non-compete would come into play to stop you from working for them.
Customer: replied 1 year ago.
Thank you very much for your reply.regarding point 2, If employer 2 do business with employer 3's client in different state.E.g. Employer 2 do business for employer 3 client in New york .
Employer 3 do business for same client in Florida. I will work in Florida for client with employer 3.Geographic region is entirely different. How non compete clause is applicable.?
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
It does not matter the geographic area is different in a case where Employer 2 can prove that they do business with that specific client. It would be different if you can prove that employer 2 does no business other than in MI and if that is the case you could state the non-compete is not enforceable, but if employer 2 shows that they do business in any state with any client then the non-compete could be enforced.
Customer: replied 1 year ago.
Thank you for your reply.Please help me understand one more thing1. How employer 2 will come to know that I am working for their client in different state with different employer. Will they track me anyhow?
Customer: replied 1 year ago.
Please note employer 2 wanted me to work for client which is no where related to employer 3.There is chance where client which I am going to work with employer 3 is related to employer 2 somewhere.I do not know complete list of employer 2's client. Ideally if I join any company in different state, non compete clause will restrict me to earn by bread and butter.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
The employer will not track you, but they make periodic checks and it only takes one person to call about you or provide them information.
I understand that a non-compete can stop you from working, which is why you should not have signed it, but they are enforceable.
Customer: replied 1 year ago.
Thank you for your reply.I read articles where it is written that non compete clause are geographic specific. It would be co incident that employer 3 and employer 2 share same client in different state. Employer 2 never hired me for that client. He wanted me to work only for client which is no where related to employer 3I did not provide any service to common client of employer 3 and 2 thru employer 2. Thus I do not have any information which will be damaged. It would be pure co-incident if I work for that client with employer 3. I even did not heard name of client before starting working with him thru employer 3. Employer 2 have 100 + client. In this scenario, I will not able to work life time with any employer. Practically non complete clause is then ruining my life.
I will not able to earn bread and butter in this way then.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
The issue with "geographically reasonable" which is what you are reading about is the employer has to prove they actually extend their business into a particular region. If they can prove they do business in a particular region, then it is geographically reasonable.
Here, if they prove they do business in the state where this client is located, then the contract is geographically reasonable.
It does not matter that you did not provide previous service to common client unless your non-compete says that is the only restriction.
You keep saying "I will not be able to earn bread and butter in this way," but you signed the non-compete and that is the whole purpose of the non-compete and you should not have signed it if you did not agree with it.
Customer: replied 1 year ago.
Thank you for reply. I am going to do settlement with company to do stupid mistake of signing contract. I will pay them good amount ( $5k-6k) as part of liquidated damage. what is possibility that they will again sue me under non compete?During settlement, will they consider entire old contract as null and void. I am already paying them good amount during settlement.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
If you are going to settle with them, the non-compete needs to be a part of that settlement and you need to get them to release the entire contract, which would include the non-compete.