The next day after that, Urban found a company, called Bobcat’s Bookkeeping LLC, that would handle money and do human resources work for him. He hired Bobcat’s Bookkeeping company and started his own business. All Urban’s clients immediately fired T&R and hired Urban’s new business. T&R filed lawsuits against all three. All three had signed noncompete agreements. Unfortunately, tow-recovery companies often face situations with employees where it is difficult to enforce a contractual agreement. The towing business is very competitive and requires highly skilled specialists, who are good workers, can operate the equipment, and navigate control of a chaotic scene. Companies must invest incredible resources into developing these specialists. It takes time, money, risk, and sacrifice.
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Meanwhile, employees do not always want to repay your investment. Once they become highly skilled, they may want to start their own tow-recovery company—using the skills you gave them. To protect their investment, many companies use non-compete agreements. So the question is: who wins on each of these lawsuits noted above? The first answer is (as always with lawyers) “it depends.” How well did T&R write its non-compete agreement? Under what circumstances did the employee sign it? Did T&R include a condition for continued employment on the signature? Did T&R offer a bonus for signing the contract? Each of these questions, and others, could influence the enforceability of the non-compete agreement right out of the gate. The second answer is again, “it
depends.” Let’s say the contract was signed under conditions that would not be a problem for T&R. The next question is whether the contract protects more than the company is allowed to protect. The company is allowed to protect its own products and its own investments. It is not allowed, however, to protect things it did not create and did not invest in. This is called the company’s “protectable interest.” The third question is yet again, “it depends.” Let’s say there are no problems in how the agreement was executed and the agreement only covers the employer’s protectable interest. The next question the court will ask is if the agreement is unduly harmful to the former employee or the community. Court generally will not enforce contracts that put people completely out of work or deprive communities of highly-needed skilled
AmericanTowman.com | November 2021 • West 69