Companies with Kentucky employees need to review their non-competition agreements. The Kentucky Supreme Court recently issued a significant decision in Charles T. Creech, Inc. v. Brown and Standlee Hay Company, Inc. regarding sufficient consideration to support non-competition and non-solicitation agreements. “Consideration” is the value that employees receive in return for agreeing to the terms of non-competition agreements. At the beginning of the employment relationship, the job offer itself provides the consideration to support these agreements. Current employees, however, already have their jobs and arguably are not receiving anything new for having to sign the agreements. The Kentucky Supreme Court decided that in most instances, continued employment without other changes in terms and conditions of employment is no longer sufficient consideration for employees to enter into non-competition agreements. This change may affect the enforceability of agreements for your employees in Kentucky.
The Kentucky Supreme Court in Creech determined that a former employee did not receive sufficient consideration based on several factors. The court noted the employee received nothing new of value after executing the agreement: no raise, bonus, specialized training, or promotion. He received neither better nor additional employment rights that he would not otherwise have had. The agreement was not part of an overall employment contract, and the employee had worked for many years without a non-competition agreement. Interestingly, the court noted that the employee was not threatened with the loss of his job if he refused to sign the agreement.
Employers with employees in Kentucky may want to consider reviewing whether they are providing any additional benefits to current employees when requiring them to sign non-competition agreements. For non-competition agreements that were obtained sometime after the start of employment, ensure that employees were given additional consideration (raise, bonus, promotion, specialized training, or some other benefit) at the time the agreements were signed. If the consideration is not readily apparent from the agreement or from information in a personnel file, then you may want to consider requiring current employees to resign them with the consideration spelled out in the agreements.
If you have any questions about drafting or enforcing your non-competition and non-solicitation agreements, please contact us.
Topics/Tags
Select- Labor & Employment Law
- Employment Law
- Social Media
- Employer Policies
- Employment Litigation
- Employer Rules
- Labor Law
- Wage & Hour
- Discrimination
- EEOC
- Department of Labor
- Americans with Disabilities Act
- Coronavirus
- Artificial Intelligence
- Worker Classification
- NLRB
- Title VII
- Pregnancy Discrimination
- OSHA
- Workplace Violence
- Non-Compete Agreements
- Reasonable Accommodation
- Compliance
- Religion Discrimination
- Harassment
- FLSA
- Department of Justice
- Supreme Court
- National Labor Relations Board
- NLRA
- Privacy
- Employee Benefits and Executive Compensation
- Diversity
- Arbitration
- FMLA
- Federal Trade Commission
- Performance Improvement Plans
- Workplace Accommodations
- Overtime Pay
- Department of Homeland Security
- Immigration and Customs Enforcement
- Foreign Nationals
- Immigration and Nationality Act
- Inclusion
- LGBTQ+
- Litigation
- IRS
- Medical Marijuana
- Disability Discrimination
- Retirement
- National Labor Relations Act
- Accommodation
- Sexual Orientation Discrimination
- Race Discrimination
- Employer Handbook
- ERISA
- ADAAA
- Unions
- Medical Cannabis Dispensaries
- ACA
- Affordable Car Act
- Sexual Harassment
- Technology
- Whistleblower
- United States Supreme Court
- Federal Arbitration Act
- Transgender Issues
- Disability
- 401(k)
- Employment Settlement Agreements
- Sixth Circuit
- Equal Employment Opportunity Commission
- Fair Labor Standards Act
- Benefits
- Class Action Litigation
- Gender Identity Discrimination
- Posting Requirements
- Disability Law
- Paycheck Protection Program
- E-Discovery
- Evidence
- Securities Law
- Family and Medical Leave Act
- Environmental Law
- Preventive Care Benefits
- Health Savings Account
- Privacy Laws
- SECURE Act
- US Department of Labor Employee Benefits Security Administration
- Representative Election Regulations
- Healthcare Reform
- Older Workers' Benefit Protection Act (OWBPA)
- Affirmative Action
- Electronically Stored Information
- Equal Opportunity Clause
- Telecommuting
- Compensable Time
- Occupational Safety and Health Administration
- Security Screening
- E-Discovery Case Law
- Electronic Data Discovery
- ESI
- Attendance Policy
- Return to Work
- Seniority Rights
- Unemployment Insurance Integrity Act
- American Medical Association
- Classification
- Confidentiality
- Disability Leave
- Equal Pay
- Fair Minimum Wage
- Federal Minimum Wage
- Genetic Information Discrimination
- Media Policy
- Misclassification
- National Origin Discrimination
- Retaliation
- Social Media Content
- State Minimum Wage
- Wage Increase
- Employment Incentives
- HIRE Act
- Social Security Tax
- Taxation
- Antitrust
Recent Posts
- No Free Delivery: Misclassification Comes at a Price
- One Tweet Away From Trouble: Social Media at Work
- Outsourcing Hiring Won’t Outsource Risk: Implications for Employers Using AI in Hiring
- No Intent, No Liability: Sixth Circuit Narrows Employer Liability for Third-Party Harassment
- AI in Hiring: The Promise, the Pitfalls, and the Response
- Two Big Beautiful Tax Deductions: What Employers Need to Know
- OSHA’s Updated Inspection Program: What Employers Should Know and Expect
- SCOTUS Lowers Bar for Reverse Discrimination Claims
- Revisiting ADA Compliance: Lessons from a Recent Court Decision
- Federal Court Strikes Down Part of EEOC Rule Requiring Accommodations for Elective Abortion Under the PWFA