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Phoenix Contract Turns to Ashes

Daniel Lublin | Feb 25, 2011

Employers often fear, with good reason, that assets, information and influence entrusted unto employees will one day be used against them.  In order to protect against this risk, employment contracts often contain post-employment restrictions that limit an employee’s ability to solicit or work for competition.

Daniel Lublin writes in the Metro about a case that exemplifies a fatal flaw many employers exhibit in attempt to protect their interests – ambiguity.

After Paul Brownlee left Phoenix Restorations Ltd., to work for a competing company, he solicited two former clients, despite having signed several employment contracts that prohibited both actions for a period of two years.  In order to put a stop to Brownlee, Phoenix applied for an interim court order.

The judge decided against upholding the restrictions for reasons that are not unfamiliar – the terms of the clause in question were overly broad.  The post-employment restrictions in place overstepped what could have been reasonably expected of Brownlee by limiting him from soliciting or working for competition that was unknown to him while at Phoenix.

Although it can be difficult when protecting personal interests, employers should refrain from overly ambitious goals and consider whether lesser restrictions can accomplish the same thing.  Had Phoenix been more specific in the scope of constraints, they might have been successful.

Daniel Lublin offers some good advice to employees considering departing: check twice to see if your contract limits post employment activity; although Phoenix lost this one, “Such clauses are commonplace in today’s employment contracts – and are increasingly being enforced.”