On October 17, 2016, the NYTimes reported the following story, reprinted below in its entirety. As you know, I hate confidentiality, noncompetition and arbitration agreements that employers like Bridgewater Associates force employees to sign as a condition to obtain employment. I have never met an employee/client who had the basic intention to enter into these types of agreements and for good reason. Noncompetition agreements foster unreasonable restraints on an employee’s livelihood, with absolutely no benefit to the employee, but at great economic advantage to firms like Bridgewater. Noncompetition agreements used by Bridgewater and other employers curtail the free flow of human capital and stifle economic development (i.e. development of the Route 128 Tech Corridor in Boston curtailed by noncompetition agreements). Employees believe they are powerless because they need a job, especially after the Great Recession. Arbitration and confidentiality agreements seek to control and conceal the unlawful acts of employers, as there exists no public database to discover the existence of arbitration claims and their outcome. The NLRB now seeks to set a precedent based on Bridgewater’s employment practices presumably to prohibit or significantly curtail the use of all three agreements. If successful, the NLRB decision would in fact become a watershed decision. Employment agreements arise out of private negotiations between clearly unequal bargaining opponents, and the NLRB could seek to reign in overbroad and overbearing provisions such as noncompetition and nonsolicitation provisions. Fortunately, some states prohibit noncompetition agreements like California and Hawaii (see NYTimes Article 6/28/16). Arbitration agreements arise out of the Federal Arbitration Act, 9 U.S.C. § 1. It is unclear how the NLRB has any authority to modify the FAA.
I routinely inform clients that these agreements are unenforceable under specific circumstances, but the specific circumstances exist in almost every case I encounter. Intent- if my client did not have the intent to enter into the agreement when he signed it, no court is going to enforce the agreement. We file declaratory judgment actions in court to seek a preliminary determination that the agreement is void as a matter of law. Employers hate this! Similarly, we use the same procedure to overcome noncompetition agreements where the employer failed to provide adequate financial consideration the day the employee signed the agreement under duress (take the job or leave it). You would be surprised to learn just how many employers/HR Departments screw themselves by not adhering to the law. Arbitration agreements can also be avoided based on a lack of intent and the failure to include a proper jury waiver set out in bold print or some other emphasis to distinguish the provision from the rest of the agreement. The right to a jury trial in civil cases arises out of the Federal and State constitutions.
The long awaited shift in the power struggle between employees and employers is absolutely upon us, employers get ready! I’m so excited… I’m foaming at the mouth like a Werewolf in London!