Non-Compete and Recruitment Payback

My question involves labor and employment law for the state of: KENTUCKY

Okay so the long story short is that my current employer had me sign something very rare according to my new recruiter. My current employer had me sign paperwork before I joined their company. I signed it because it seemed like a normal thing to sign, but three clauses in my contract are worrisome. First, I'm looking to leave and join a quasi competitor. They aren't a true competitor, but one could agree that because they are in a similar line of business they COULD be defined that way.

My question is this: Can they stop me from leaving and what are they likely to do legally if I do leave? Can they sue me and if so for what? Can they attempt to collect the 'recruitment fees' which is the only element would qualify, if they didn't disclose how much it was? I still have no idea how much it was.

Lastly, I'm bound by confidentiality right now, but IF they sue me, can I discuss that on social media? Do I have to wait until I go to court? When am I allowed to speak about it, the reason I ask, I have a large social following 100K+, which would probably give my current employer plus on any legal action.

Thanks for the help, just looking for guidance.

Here are the clauses in the AT WILL document I signed:

Upon Employee’s voluntary termination within three (3) years of initial employment, Employee agrees to reimburse EMPLOYER(name removed) for all relocation expenses, signing bonuses, and third-party recruitment fees which were either paid to the Employee or paid to a third-party on behalf of, or related to, the Employee’s employment. Employee agrees to make arrangements to remit payment to EMPLOYER(name removed) for the amount due within 20-days of termination.

Non-Competition - Competitor. Employee acknowledges that the goodwill of EMPLOYER(name removed) and its Affiliates and its marketing and support of services extends throughout the United States. In consideration of the rights granted to Employee under this Agreement, Employee covenants and agrees that for as long as Employee is employed and for one (1) year following Employee’s termination, for any reason other than a layoff due to lack of work, Employee shall not, without the prior written consent of EMPLOYER(name removed) , in any manner, directly or indirectly, own, manage, operate, consult, participate or be employed by, or otherwise connected with any person, firm, corporation, or enterprise in the United States, conducting operations that are competitive with the business activities being directly engaged in by EMPLOYER(name removed) as of the date on which Employee’s employment is terminated. Should a competing business wishing to employ Employee agree to the non-competition, non-solicitation, and confidentiality provisions established herein and enter into a mutually agreed upon separate Agreement with EMPLOYER(name removed) to that effect, then EMPLOYER(name removed) shall waive the Employee non-competition provision in relation to the Employee’s employment by that competing business.

not worried about this section...but here it is.
Non-Solicitation. Employee covenants and agrees that for as long as Employee is employed and for three (3) years following Employee’s termination, for any reason, Employee shall not, without the prior written consent of EMPLOYER(name removed) : (i) solicit, contact, interfere with, or attempt to divert any customer served by EMPLOYER(name removed) or its Affiliates, or Former Customer (as defined), or Potential Customer (as defined) identified by EMPLOYER(name removed) or its Affiliates during the period of Employee’s employment; or (ii) solicit any person then or previously employed by EMPLOYER(name removed) or its Affiliates to join Employee, whether as a partner, agent, employee, or otherwise, in any enterprise engaged in a business that competes with the business of EMPLOYER(name removed) or its Affiliates at the time of Employee’s termination.

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Quoting Smerer27

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Okay so the long story short is that my current employer had me sign something very rare according to my new recruiter. My current employer had me sign paperwork before I joined their company. I signed it because it seemed like a normal thing to sign, but three clauses in my contract are worrisome. First, I'm looking to leave and join a quasi competitor. They aren't a true competitor, but one could agree that because they are in a similar line of business they COULD be defined that way.

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You can bet that your current employer will define them that way.

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Quoting Smerer27

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Can they stop me from leaving

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No.

You can walk out the door any time you want.

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Quoting Smerer27

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what are they likely to do legally if I do leave? Can they sue me

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Yes.

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Quoting Smerer27

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if so for what?

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Lots of dollars. Any and all amounts that they say you cost them as a result of you breaching the contract.

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Quoting Smerer27

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Can they attempt to collect the 'recruitment fees' which is the only element would qualify, if they didn't disclose how much it was? I still have no idea how much it was.

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Yes, they can attempt to collect the "recruitment fees" and probably be successful. You promised to pay them. If you didn't find out how much they were before signing the contract, I'm afraid that's your problem.

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Quoting Smerer27

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I'm bound by confidentiality right now, but IF they sue me, can I discuss that on social media? Do I have to wait until I go to court? When am I allowed to speak about it, the reason I ask, I have a large social following 100K+, which would probably give my current employer plus on any legal action.

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It would be unwise and potentially costly to discuss the lawsuit online. Not only could slamming the company's reputation add to their monetary loss but they might have an additional cause of action for defamation.

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Quoting Smerer27

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Here are the clauses in the AT WILL document I signed:

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I didn't need to read them to be able to tell you to take that contract to an attorney before you decide to breach it.

There does not appear to be any guidance on these issues in Kentucky's statutes or, from what I'm not claiming to be a complete review, Kentucky's published case law. Your best bet truly is to consult a lawyer about the enforceability of the contract, whether you might have an argument to be relieved from some of it's provisions, whether you have an argument for proration, and the like. You should also discuss whether your employer could successfully enjoin you from working for the competitor, in which case you could find yourself unemployed.

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Quoting adjusterjack

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Lots of dollars. Any and all amounts that they say you cost them as a result of you breaching the contract.

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This isn't at will employment then is it? It seems more like I'm forced into staying with them indefinitely until I am able to get a position outside the industry. How can THEY have it both ways? Do you think this would hold up in court? They've let others go to competitors, can they selectively enforce agreements and contracts?

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Quoting adjusterjack

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Yes, they can attempt to collect the "recruitment fees" and probably be successful. You promised to pay them. If you didn't find out how much they were before signing the contract, I'm afraid that's your problem.

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But I didn't know how much I was promising. There in lies the key to my problem. They NEVER disclosed that amount. How can I be held liable for an amount wasn't disclosed to me and I was not a party to the contract between the employer and the recruiter? There also is no pro-ration what so ever, this seems to be abnormal in what I've read and courts generally view this dis-favorably, at least I think they would. Thoughts on that?

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Quoting adjusterjack

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It would be unwise and potentially costly to discuss the lawsuit online. Not only could slamming the company's reputation add to their monetary loss but they might have an additional cause of action for defamation.

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Doesn't defamation have to be FALSE? Simply stating that I'm being sued by my ex-employer isn't stating defamation, it would be the truth. The issue I see is sure it would damage their reputation, but THEY are the ones damaging themselves, by suing me, someone who has a sizeable digital audience. You can't hit me and then expect me not to say you hit me, that seems unreasonable, it's a simple statement of fact. I wouldn't be able to even discuss the case when IF it goes to court?

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Quoting adjusterjack

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I didn't need to read them to be able to tell you to take that contract to an attorney before you decide to breach it.

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Already have a meeting scheduled for Monday morning. :)

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Quoting Mr. Knowitall

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There does not appear to be any guidance on these issues in Kentucky's statutes or, from what I'm not claiming to be a complete review, Kentucky's published case law. Your best bet truly is to consult a lawyer about the enforceability of the contract, whether you might have an argument to be relieved from some of it's provisions, whether you have an argument for proration, and the like. You should also discuss whether your employer could successfully enjoin you from working for the competitor, in which case you could find yourself unemployed.

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I will make sure to bring that issue up with in my meeting on Monday. How could they go about 'enjoining' me. (Sorry as I type I'm going to Google that as well).

Another question is they did not disclose the amount of repayment. Can they legally bind me to any amount? How do I know they are telling the truth? I'm guessing the amount is around 33% of my take home pay. How would a court look on that?

Would they enforce it, considering I didn't know what I was signing?

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Quoting Smerer27

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I didn't know what I was signing?

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That's the problem.

Courts don't have much sympathy for people who didn't know what they were signing because the presumption is that you read and understood the contract and all of its potential consequences before you signed.

"I didn't know what I was signing" is not a defense.

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Quoting adjusterjack

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That's the problem.

Courts don't have much sympathy for people who didn't know what they were signing because the presumption is that you read and understood the contract and all of its potential consequences before you signed.

"I didn't know what I was signing" is not a defense.

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That's fair, but they didn't disclosure the amount, one would think it's incumbent on them to make candidates fully aware of the implications of what they are signing.

I read this here, which I thought was interesting. Again thanks for your comments, they are truly appreciated.

http://www.fordyceletter.com/2011/10...ing-back-fees/

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Employee payback agreements (EPA’s) have been around since I worked a desk in the mid-60′s. The early ones can be traced to the days when APF (applicant-pay-fee) employment agencies morphed into EPF (employer-pay-fee) executive recruiters. They were a way for recruiters to close deals with employers by shifting the risk of loss to the candidate.

The short answer to your question is that EPA’s are legal. As we speak, I’m involved in hassles with several employers over attempts to recover the fees from falloffs. They won’t.

The reason isn’t the legality of the agreements. It’s the enforceability of them.

I’ll explain:

EPA’s are considered employment agreements. As such, they’re disfavored under the law. That’s a professional way of saying they’re disliked by judges and juries. So if the employer lawyer didn’t draft the EPA exactly right, it will be subject to attack by the ex’s lawyer. (That’s why we’re so careful to prepare our recruiter employment agreements properly. Then we even update them at no charge if the laws governing enforceability change.)

Are there patent (obvious) or latent (hidden) ambiguities (unclear terms)? Does the EPA reflect that the new hire knew and understood the terms? Does it prevent allegations of fraud (intentional misrepresentation), undue influence (coercion), or duress (threats)? How about allegations of mistake (caused by the ambiguities)? In this case surprise too, since the new hire didn’t have notice (a clue).

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But none of that prevents them from presenting you with a bill and if you refuse to pay, suing you. You will have to mount a defense. Even if you win it will be costly.

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Quoting Smerer27

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That's fair, but they didn't disclosure the amount, one would think it's incumbent on them to make candidates fully aware of the implications of what they are signing.

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One would be wrong if one thought that.

Self preservation is nobody's business but you're own. You're supposed to understand the contract before you sign it. If you don't get a satisfactory understanding of all the potential consequences you don't sign.

Unfortunately, like many who end up here, you were probably happy to get the job and signed whatever they put in front of you.

I've been there. When I discuss non-competes and employment contracts, I speak from a bad experience years ago.

In theory, you might be 100% right about your defenses to a potential lawsuit for breach of contract but the problem is that nothing prevents the lawsuit from being served on you and then you have to pay a lawyer a barrel full of money to properly defend you. Litigation can take a year or two and cost tens of thousands of dollars. The emotional pressure on you (along with the financial pressure) can make you a basket case. If that affects your performance at your new job, you could get fired. If your former employer brings your then current employer into the lawsuit you could get fired for that, too.

So, before you jump ship to go to work for a "competitor", make damned sure that you are willing to engage in a long, expensive battle if worst case scenario occurs, and have the money to back it up.

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Quoting Smerer27

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I read this here, which I thought was interesting. Again thanks for your comments, they are truly appreciated.

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It's an article by an California lawyer. It is intentionally broad and general, and sheds no light on the status of your agreement under the laws of your state.

See my response to you over on FreeAdvice. Agreements like this are not only fairly common, they are enforceable. Period.