What's an employee to do?
Well, they can file a suit against an employer for something called declaratory relief, asking the court to determine their rights. The problem is, there's no quick way to get declaratory relief. By the time a judgment is issued, the employee has spent tens of thousands, if not hundreds of thousands, of dollars and the job prospect is long gone.
Employers, if they even think an employee is about to breach a noncompete, can get an injunction. They can ask the court, on an emergency basis, to order the employee to stop working for a competitor or stop contacting clients. They tell the court that the potential loss of customers, the potential that a competitor will learn their secret ways of doing business, is irreparable harm. The courts are quick to find that any potential dollar loss to employers would be irreparable. As an example, in Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69-70 (2d Cir.1999) the court found it was ,"very difficult to calculate monetary damages that would successfully redress the loss of a relationship with a client that would produce an indeterminate amount of business in years to come."
Employees don't get the same treatment. A recent case confirms the courts' attitude that loss of a job is not irreparable harm for an employee. In Hyde v. KLS Professional Advisors Group, a case out of the Second Circuit, the court found that “difficulty in obtaining a job is undoubtedly an injury, but it is not an irreparable one” because the employee could be adequately compensated with money damages if they win at trial.
So let's see. Loss of corporate money and relationships: irreparable. Loss of human money and relationships: not irreparable. Nice.
I find this kind of reasoning to be not only specious, but immoral and unjust. The way noncompetes are being handled in the justice system is a travesty. Something has to change, but nothing will until voters rise up and demand at least equal rights for humans as compared to their corporate masters.
Here are just some of the irreparable harms real people suffer when they have their new job yanked out from under them:
• Loss of their homes to foreclosure
• Destruction of their credit
• Legal discrimination based on the fact that they are unemployed
• Legal discrimination based on the fact that they have bad credit
• Damage to their resume with a very short-term job
• Damage to their reputation with the new employer who fired them to get out of being sued
• Emotional injuries suffered from being unemployed
• Loss of insurance and resulting health issues
Sure, rich employees can fight and ultimately win against bully employers trying to enforce illegal noncompetes. But most can't afford to fight. They end up out of their industry a year or two, and many end up unemployed that long. Who pays the cost? Taxpayers suffer the increased cost of unemployment benefits, welfare, healthcare and other costs. We also suffer a damaged economy that much longer.
I would submit that most noncompetes violate antitrust laws and are unenforceable due to the employer having no legitimate interest to protect in enforcement. Yet these bully employers usually get away with it because employees can't afford to fight. Maybe it's time for employees to start contacting the Justice Department about antitrust violations if they can't afford to fight. Would the government step in to help against an employer who wants to prevent competition? I don't know.
Because the courts refuse to recognize the utter devastation job loss will certainly wreak by enjoining employers from interfering with their employment with unlawful and unenforceable noncompetes, Congress and state legislatures need to take action to protect individuals. If you think this is wrong, tell your representatives the law needs to change. Only iff enough people speak up will anyone listen.