Non Compete Unenforceable for Failure to Pay Commissions
One reason a court may not enforce a non compete clause is if the employee has not been paid as agreed. Below is one example of a non compete dispute we were able to resolve favorably due to non payment of commissions.
Commissions and Non Compete Case Study: BackgroundClient A was a sales representative for a staffing company in Massachusetts. As he and two colleagues faced increasing challenges in the workplace, they began to consider starting their own agency. They made careful and thoughtful plans, and researched the idea thoroughly.
The one wall they kept bumping into was there non compete agreements. The agreements were aggressive, and imposed restrictions for four years after employment. They also knew, however, that there had been many problems with payment of sales commissions in the company. At the time of their resignation, they were each owed substantial commissions. In addition, there had been material changes in each of their positions, titles and responsibilities since signing the non compete agreements. Commissions and Non Compete Case Study: Strategy and OutcomeWe filed a complaint on behalf of Client A and his colleagues. In the complaint we sought payment of the commissions and also a declaratory judgment that the non competes were not enforceable. The employer, in turn, filed a counterclaim seeking enforcement of the agreements.
After initial discovery in the case, we were able to resolve it in such a way that the clients received compensation and they were allowed to continue with their business plans. They are still in business today and thriving. Also, the company in question revised its commission policy after the lawsuit to bring it into compliance. This brought a benefit to all of the other sales representatives still at the company. Commissions and Non Compete Case Study: Takeaways |
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There are a number of lessons to be learned from this example that may help you if you are facing a dispute over a non compete agreement
- You don't have to wait for your employer to sue you. Sometimes it is to your advantage to be the first one to go to court, as it was in this case.
- If you are facing a threat of non compete enforcement, it pays to examine your own compensation history carefully. You may not have otherwise thought to raise any issue or complaint about it. But it can be a very useful tool if you are facing a dispute over your employment agreements.
- It is also worth examining whether your role or position changed since signing the non compete clause. One of the arguments we were able to make was that the employment agreement was void due to subsequent changes in role.
- Client A and his colleagues sought legal advice early in the process. This allowed them, with the help of their legal team, to develop a strategy with clear information about their legal rights.
Can We Help You?
We have years of experience representing people in non compete lawsuits in Massachusetts state and federal courts, as well as responding to cease and desist letters, and we would be happy to help. You can use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.
