Publications
ANALYSIS AND REVIEW: WHAT DO YOU THINK? – June 2004
In last month’s “What Do You Think?” we asked if your company uses arbitration agreements, employment agreements, covenants not to compete, and similar devices as tools to protect company rights and property as well as to minimize employment law liability. Below is a sampling of the responses we received:
Some of your comments:
- We use these types of tools for senior level positions only, which raises the question, should we be using them for all positions?
- No, we are a small organization and have not used these types of agreements – except for our CEO who has an employment agreement.
- We started requiring our sales team to sign restrictive covenants and it has come in handy when a competitor tried to raid our best sales people. I am not aware of my employer using these kinds of things for other positions.
- Yes, we routinely use these types of documents.
Analysis:
Whether your company is large or small, it has assets to protect and liabilities to protect against. Employment agreements and arbitration agreements can help avoid ambiguities and unrealistic expectations – on both sides of the employer/employee relationship. Non-compete, non-solicitation and confidentiality agreements can give an employer some comfort in a highly-competitive industry. Arbitration agreements can remove the threat of runaway juries and long term litigation.
However, there are pros and cons to all these options. For instance, as useful as they may be, non-competes are not always enforceable, and even though arbitration can save time and money, most arbitration awards are not appealable, so there is no recourse if a mistake is made. The point is simply this: these devices can be extremely worthwhile planning and strategic tools in the right circumstances, but the drafting nuances and variations, and policy decisions associated with their design and implementation, can be daunting. Consult your attorney before you sign on the dotted line.
Counsel Consulting Group LLC helps companies throughout the United States avoid employment and HR-related claims and liabilities. CCG assesses existing policies, procedures and problem areas; it provides customized liability-avoidance training to managers and executives; and it designs and implements business techniques that reduce employment liability risks on a long term basis. CCG also offers specialized workshops for managers and HR executives, customized consulting in focused employment-related areas, and CD-ROM and web-based training alternatives. For more information, contact us at info@powelltrachtman.com and visit our website at www.counselconsulting.com.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
