Acceptable Scope of a Non-Solicitation Clause: A Real-Life Example

| April 17th, 2017 | No Comments »

For most employees, a non-solicitation clause should be all that is necessary if an employer is seeking to protect his/her business interests (clients) from employees who leave to a competitor. However, employers must be careful with the wording of such clauses because the clause must only go as far as necessary to protect the employer’s business interests. This is the ‘reasonableness’ standard with which the courts will review a non-solicitation clause. Any restrictions on the employee’s freedom to work must be necessary to protect the employer’s business or the clause will be unenforceable.

Non- Solicitation Clauses

There are a few things that a non-solicitation clause must contain to be enforceable. The clause must have a limited geographic scope and time in place that is reasonable. Further, a non-solicitation clause must be limited to the act of solicitation. If the wording of the solicitation clause goes beyond the solicitation of the employer’s client base, then it is likely to place unreasonable limits on the employee’s ability to freely compete and earn a living. Lastly, it is wise to limit the act of solicitation so that it is not too burdensome. This may entail only restricting the solicitation of the clients that the employee dealt with or the types of clients that the employee works with. To better understand the limits of a non-solicitation clause, the case of Donaldson Travel Inc. v. Murphy et al. 2016 is useful to review.

Donaldson v. Murphy, 2016 (Superior Court of Justice – Ontario)

In the case, Murphy was a former employee of Donaldson Travel that left to work for a competitor company named Goliger. One of Donaldson Travel’s claims was that Murphy solicited clients and therefore violated the non-solicitation clause that Murphy had signed. The clause reads:

Mary agrees that in the event of termination or resignation that she will not solicit or accept business from any corporate accounts or customers that are serviced by … Donaldson Travel, directly, or indirectly. (emphasis added)

The court deemed this clause unenforceable for several reasons. Firstly, there was no limit in time and geography. As it is worded, this clause would never expire and would apply anywhere in the country. This is unnecessary to protect Donaldson Travel’s business interests. Secondly, the phrase “or accept business from” goes beyond the act of solicitation. This places an unreasonable restriction on Murphy’s ability to earn a living because it is not necessary to protect Donaldson’s business interests. Lastly, the term “any corporate account” is also too broad. It would be reasonable to limit the solicitation of clients that Murphy dealt with; however, the wording here would prevent Murphy from conducting business with any clients of Donaldson, even the ones that Donaldson establishes after Murphy had left. This is not needed to protect Donaldson’s business interests by the departure of Murphy.

Closing Remarks

The burden is placed on the employer to carefully draft such clauses and to show that the clause is reasonable. The wording of the clause is important as the courts will not look beyond the wording of the clause, nor will they change the clause so that it is legally enforceable. For employees that are not in a managerial role, a non-solicitation will almost always suffice in protecting an employer’s business interests. It is important to seek the assistance of an employment lawyer when seeking to protect business interests through non-solicitation clauses.

Online Legal Services Are Growing, for Better or Worse

| January 11th, 2012 | No Comments »

A dramatic shift is taking place in the technological world that has altered the environment in which lawyers operate.   Much like the dinosaurs, some people speculate that certain law firms may face extinction.

What is this dramatic shift? The online provision of legal documents and services.  Several companies now offer downloadable templates and tutorials for clients who want to pay less and do more.  The Lawyers Weekly wrote a great article outlining a brief history and some of the key sceptics and defenders of this new era.

Defending the do-it-yourself approach, Jordan Furlong of Lawyers Weekly says “this is a growth industry for the future of the legal marketplace.” – The main demographic to benefit being small businesses and individuals who believe they can’t afford high-priced lawyers.  Warren Smith of The Counsel Network calls this “the Wal-Mart of legal services,” and urges firms to incorporate this approach into their practice or seek strategic alliances.

Not everyone believes this service is all it’s cracked up to be.  Daniel Lublin, Partner of Whitten and Lublin says it’s “a scam”.  As the old adage goes, you get what you pay for.  Cheap legal services can create the illusion of assurance, when in fact, people may be unknowingly missing key parts of the puzzle that could end up costing them dearly.

Since it is still virtually fresh on the market, popularity in online legal services will likely grow, but whether it sticks around will be determined by the reputation it garners.  Competition will increase, and so too will the spectrum of quality in services.   When it comes to anything beyond routine and simple procedures, it’s unlikely, and even dangerous to consider removing legal consultation from the equation.

Miniskirts or Merit: Which Workplace Weapon Will You Choose?

| December 2nd, 2011 | No Comments »

David Whitten, partner of Whitten and Lublin was recently quoted in a Toronto Star article by Morgan Campbell titled, “Too sexy for the cubicle”.

The article explores a study published by University of Ottawa professor Tracy Vaillancourt that suggests women in the office act aggressively towards peers they perceive as physically attractive.

The experiment recorded the reactions of women awaiting an interview after they had been approached by an assistant wearing either khakis or a miniskirt.  The study found that 97% of the women involved felt hostile towards the assistant in the miniskirt, whereas they hardly noticed the one in conservative attire.

Vaillancourt believes that this hostility is hardwired in women as an evolutionary competition for a mate.  Whitten, an expert on workplace bullying, believes that these reactions can be explained in a different way.  He says, “It’s not a conflict for a mate. The proverbial mate is the job”.  Particularly when opportunities are scarce, competition for advancement can cause hostility.  Two solutions Whitten suggests are sensitivity training and a comprehensive dress code.

Whether it’s competition for a mate driving this hostility or competition for advancement, there are some clear lessons for employees.  Be ready for potentially negative responses to provocative clothing, and mindful of the impact it can have on relationships with colleagues.

 

It’ll Get You Fired, and Stop You from Getting Hired

| July 15th, 2011 | No Comments »

Whether you like it or not, employers are checking your web presence.  They are “googling” your name, checking your LinkedIn account and depending on your privacy settings, finding out how drunk you got at the bar last Friday.

A recent article in thestar explains the rationale behind this growing trend in recruitment:

What you see on social media offers a window into what you are bringing into your office’s lunchroom. If a person is ‘out of line’ while online, you run the risk of adding that to the culture of your workplace.

Interesting data drawn from surveys cited in the article include:

  • 72% of companies have rejected a candidate based upon their online reputation
  • Top reasons for not hiring – “provocative or improper photos, posts about drinking or drug use, badmouthing previous employers, co-workers or clients, bad grammar or communications skills, discriminatory comments and lying about qualifications.”

One of the less desirable outcomes from having all of this information available to employers online is the potential for discriminatory hiring practices.

Daniel Lublin, Partner at Whitten and Lublin LLP explained in the article that legally, employers are permitted to screen applicants online – “What they can’t do is they can’t make hiring decisions based on anything that would be considered discriminatory.”  That being said, Lublin also noted the difficulty in proving discrimination occurred.

So how can you make the web work for you?  For starters, there’s a company that will carry out your damage control for a fee – Reputation.com.  But whether you pay a fee or do it yourself, it’s important to take a proactive approach and control your online presence.

A few helpful tips from the article:

  • Raise the privacy settings on your Facebook account;
  • Create your own website to highlight skills and qualifications. This can be done for as little as $15 a year; alternatively, post your resume on a LinkedIn profile;
  • Tweets show up in Google, so become a vocal leader in your field.

Overall, remember that you aren’t safe from judgment-by-internet, and absence may be just as harmful as a poorly controlled web presence.  Taking the proper steps to control your online reputation could cause you to land a job or lose a job – the choice is yours.

Disney Foots the Bill for Playdom’s Talent Poaching

| December 14th, 2010 | No Comments »

Two computer gaming tycoons in California reached a settlement on a sensitive case, and they aren’t saying much about the details.

Zynga commenced a lawsuit against Playdom over a year ago, after losing several employees to them in a controversial manner.  According to techcrunch.com, Playdom’s list of offences includes, “misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, tortious interference with contracts, tortious interference with existing and prospective economic advantage and unfair competition”.  These charges have resulted in a preliminary injunction, a temporary restraining order, and a jail sentence for a former Zynga employee, Raymond Holmes (though it was never served).  Holmes erased hard drives, signed false documents and amidst all of this, Playdom was acquired by Walt Disney Co.

With a hush on details regarding the settlement and the stolen data, gamers are wondering what kind of information was so important to Playdom and how large of a threat Disney might pose, with such a large pool of talent and ideas to draw from.

It’s easy to see why corporations protect against things like a portfolio manager absconding to a rival company with 200 million dollars in clientele.  What is not so clear is how companies can protect themselves against theft of intellectual property and technological trade secrets.

Silicon Valley is a hub for tech giants, and houses thousands of headquarters including Google, Yahoo, eBay, and Facebook.  Often, companies with highly valued, sensitive information will have employees sign non-competition agreements, hoping to stave off the inevitable “poaching” of talent by other companies. However, as mentioned in a prior entry, like Canadian courts, California is notoriously opposed to non-competition agreements.  With seemingly little control over it, Silicon Valley is ready and willing to engage in a technological survival of the fittest.  Zynga seems happy enough with the settlement from Disney, so perhaps it’s safe to presume that whatever secrets changed hands, it won’t thin them from the herd.

Blogging done right

| April 19th, 2007 | No Comments »

"Defending yesterday — that is, not innovating — is far more risky than making tomorrow"
Peter Drucker, management guru

A well deserved thank you, to my industry friends Rob Hyndman and Kate Morgan, for assisting with the inception of my blog.   

Rob Hyndman’s is a technology lawyer and his blog is an authority in technology circles.

Kate Morgan is the President of Podwise Social Media Inc., which developes business for companies by integrating blogs and podcasts into their marketing efforts.