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SUMMARY OF LAW ON KENTUCKY NON-COMPETE AGREEMENTS

In many competitive businesses industries, employers often require their employees to sign non-compete agreements as a condition of employment with their company. A non-compete agreement is an agreement/contract between an employee and an employer that restricts the ability of an employee to work in the same field or geographic region for a set period of time following a resignation, termination of employment, or retirement.* Generally, these agreements have been held to be enforceable by Kentucky Courts, regardless of whether the employee’s employment with the company ended voluntarily or involuntarily.

As any other contract, in order for a valid non-compete agreement to exist, there must be consideration. In Kentucky, if the non-compete agreement is entered into at the time the employee was hired, the employment itself is recognized as sufficient consideration to create a binding contract. If an employee is asked to sign a non-compete agreement after they have been employed, that may be enforceable as well, if the employer demonstrates that it has provided additional consideration to the employee. It is important to note that consideration is not just monetary value and can include other benefits or specialized training that the employee received that they would not have received without working for the Employer.
The time length and geographic scope for the enforcement of a non-compete agreement is very fact dependent on the nature of the business that is seeking court protection. For a non-compete agreement to be enforceable it must reasonable.** Reasonableness in non-compete agreements is determined by Kentucky Courts in three different ways: duration, geographic coverage, and purpose.*** Courts have held that non-compete agreements can extend a restriction only far enough to protect the interests of the employer and not so much as to “impose undue hardship on the party restricted.”**** If a Court determines that a non-compete agreement is unreasonable in its enforcement, a Court retains the authority to modify an existing non-compete agreement so that its restrictions are not overly broad or burdensome on the employee. This is called the “blue pencil” rule.

Finally, employees should take note that non-competes are assignable contracts. If a new company buys out their current employer, the new company likely has been assigned the rights to enforce the non-compete agreement against the employee of the former company and will have the authority to take court action to enforce the terms of the original non-compete agreement.

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*See Kegel v. Tillotson, 297 S.W.3d 908, 909 (Ky. Ct. App. 2009); Debra H. Dawahare, § 18:7. Non-competition and conflict of interest clauses, 2 KY Forms & Transactions § 18:7 (2018 ed.).
**Hall v. Willard & Woolsey, P. S. C., 471 S.W.2d 316, 317 (Ky. 1971)
***Id. at 318.
****Hammons v. Big Sandy Claims Serv., Inc., 567 S.W.2d 313, 315 (Ky. Ct. App. 1978) (quoting Ceresia v. Mitchell, 242 S.W.2d 359 (Ky. Ct. App. 1951)).

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Ziegler & Schneider, P.S.C. Now Offers Mediation Services

Ziegler & Schneider, P.S.C., is pleased to now offer Mediation services as part of its legal practice.  Mediation is a form of alternative dispute resolution that facilitates the voluntary settlement of legal differences between parties before a Trial occurs in litigation, or sometimes before formal litigation is pursued.  Mediation can offer a resolution to an ongoing legal dispute through a confidential and more amicable and cost-effective process than that of traditional court litigation.  If you are involved in a legal dispute and believe Mediation may be a solution, Ziegler & Schneider, P.S.C., is available to help.   Mediations may be scheduled with Attorney, Shane Sidebottom, at the Ziegler & Schneider office located at 541 Buttermilk Pike, Suite 500, Crescent Springs, Kentucky 41017, or at your own preferred location.

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Ziegler & Schneider attorney, Matthew C. Smith was a guest lecturer last night at Chase Law School for  a Contract Drafting class.  Matt spoke to law school students on the importance of clear legal drafting and provided tips for negotiating contracts.  As part of the firm’s Business & Corporate Practice Group Matt has a lot of experience drafting contracts for various businesses, including but not limited to, employment contracts, representing physicians in contracting for employment, and commercial transactions.

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Dueling Court Orders Leave Kentucky Whistleblower Suit a Tangle

 

Ziegler & Schneider attorney, Shane Sidebottom, is quoted extensively in a Bloomberg News national story on a Whistleblower case that Ziegler and Schneider is pursuing in Frankfort, Kentucky, on behalf of its clients.

Bloomberg Law Daily Labor Report

Dueling Court Orders Leave Kentucky Whistleblower Suit a
Tangle

By Alex Ebert Posted Dec. 28, 2018, 2:46 PM

Opposite rulings say legislators accused of harassment can and can’t intervene in cases State legislative staffers were fired after reporting allegations.

An unprecedented split between two Kentucky judges in the same courthouse is tangling a high-profile whistleblower case in which legislators are seeking to keep sexual harassment allegations against them secret.

Franklin County Circuit Court Judge Phillip Shepherd ruled Dec. 27 that former Kentucky House Speaker Jeff Hoover and two other state representatives can intervene in the case and reopen the deposition of the alleged victim, with whom the legislators have already entered a confidential settlement.

But in a separate and related Dec. 27 opinion, another Franklin County Circuit Court judge, Thomas Wingate, ruled the legislators can’t intervene at all. He also granted a protective order for the alleged victim because the legislators signed a settlement agreement with her on these allegations, he reasoned.

The decision came in two separate cases. In the first, Daisy Olivo, former Hoover spokeswoman, alleges she was demoted and 􀃒red from her position with the Kentucky Legislative Research Commission (LRC) for reporting to several superiors the victim’s allegations against the legislators. In the second, another LRC employee, Brad Metcalf, alleges similar retaliatory termination for reporting the victim’s allegations. The victim’s allegations came to light with news reports of the legislators’ confidential settlement.

The split means the Kentucky Court of Appeals will likely be called on to decide whether politicians can enter whistleblower lawsuits to protect their reputation. Additionally, the Court of Appeals will hear a unique procedural tangle in which one judge has ordered the alleged victim to sit for her deposition while the other ordered she doesn’t have to show up.

“Everybody is in a state of absolute perplex,” Shane Sidebottom, an attorney who is representing Olivo and Metcalf, told Bloomberg Law Dec. 28. “This case is unfortunately becoming a bar exam question.”

Reps Protecting Rep

Shepherd ruled Hoover and Republican Reps. James DeCesare and Michael Meredith had an interest in protecting their reputation. Their reputations, Shepherd said, qualified as a “present substantial interest” in the whistleblower case, which allowed them to intervene under Kentucky law.

But Kentucky Whistleblower Act claims are between an employee and the employer—the lawsuits don’t include as parties any individual accused of breaking the law. That means the legislators can’t request entry to the case in their “individual capacities.”

However, Shepherd said, “this is not a typical whistleblower suit, and the issue of whether” the Legislative Research Commission, “as an entity, has the power to sue or be sued in the context of a Whistleblower Act claim is unsettled.” He ruled that the legislators could intervene in their “official capacities” due to legislators sitting on a 16-member panel that controls the commission.

The alleged victim will ask the Court of Appeals to block the deposition, her attorney, Gail Langendorf, with Busald Funk Zevely P.S.C. in Florence, Ky., told Bloomberg Law on Dec. 28. Sidebottom, who is with Ziegler and Schneider P.S.C. in Covington, Ky., said he would also be filing a similar request.

To get a Court of Appeals hearing, the alleged victim must show she would suffer great injustice and irreparable injury if her deposition was reopened. Langendorf thinks this situation clears that hurdle, as the legislators chose to settle with the alleged victim instead of disputing her claims in court.

“My concern is this judge’s order would lead to a chilling effect on people employed by the commonwealth bringing forward allegations,” she said. “There’s this poor girl who has sexual harassment claims who is being dragged through the abyss because she accurately reported,” she said.

‘What’s the Cutoff?’

Wingate ruled reopening the deposition would “create numerous side issues and essentially lead to a mini trial” on claims already settled. “This Court will not turn a straightforward claim of retaliation under the KWA into complex litigation creating new interests wholly unrelated.”

Sidebottom, an expert on Kentucky Whistleblower Act litigation, agreed with Wingate’s ruling and said that allowing legislators, or other intervenors, would “shoot holes” in one of the U.S.’s most worker-friendly whistleblower laws.

The law doesn’t require a worker’s underlying report of illegal activity to be true for the person to be protected. It just must be made in good faith. Thus, hashing out the victim’s allegations is irrelevant for his client’s claims, and allowing in parties with a reputation interest could have a chilling effect on public workers reporting illegal activity.

“I’m sure every wrongdoer would like the opportunity to enter a case and challenge the wrong they are alleged of doing, but that’s never happened before,” Sidebottom said. “I’m fearful that we’re creating special rules for people of privilege to allow people to intervene to protect their reputation. What’s the cutoff?”

The legislators’ attorney didn’t immediately respond to a request for comment.

 
The cases are: Metcalf v. Legislative Research Comm’n, No. 18-CI-245, motion to intervene denied 12/27/18 and Olivo v. Legislative Research Comm’n, No. 17-CI-1256, motion to intervene granted 12/27/18.

https://news.bloomberglaw.com/daily-labor-report/dueling-court-orders-leave-kentucky-whistleblower-suit-a-tangle

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Kentucky Supreme Court Rules That Employers Can’t Force New Hires to Sign Arbitration Agreements

Last week, the Kentucky Supreme Court issued a very important decision for all employees in the State of Kentucky. The Supreme Court ruled that employers cannot require its employees to sign Arbitration agreements as a condition of being hired or maintaining their current jobs.
Ziegler & Schneider attorney, Shane Sidebottom, briefed the case and then successfully argued this very important issue before the Supreme Court.

https://www.cincinnati.com/story/news/2018/10/02/kentucky-employers-cant-make-new-hires-agree-arbitration-kentucky-supreme-court-rules/1491433002/

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