Non Compete Unenforceable for Unlawful Wage Deductions
One reason a court may not enforce a non compete clause is if the employee has had unlawful deductions taken from their paycheck. Below is one example of a non compete dispute we were able to resolve favorably due to unlawful wage deductions.
Case Study B: Background
Client B was a hair stylist employed by a salon that was part of a regional chain. She had a dream of opening her own salon, and was saving money to do so. This was made more difficult by the fact that her employer had a practice of deduction a "product charge" from the commissions due for each customer. This amount was deducted to cover the salon's cost of purchasing products used in serving customers.
She did not know if she had a non compete agreement, but did some research about restrictive covenants in the hair salon industry. In her research, she learned that the standard geographic area for non compete agreements in her industry was three miles.
Armed with that information, she found a location four miles from her employer and signed a lease. When she gave her notice, her employer threatened her with a lawsuit based on an employment agreement she had signed with a covenant not to compete.
Case Study B: Strategy and Outcome
We helped Client B fill out a complaint with the Massachusetts Attorney General about the wage deductions. Once she received her right to sue letter, we brought a complaint in court seeking damages as well as a declaratory judgment that her non compete was unenforceable.
With respect to the non compete, we argued that the employer had no legitimate business interests to protect, and that she had no trade secrets or confidential information. In addition, most of her clients had followed her from a previous job, making it questionable whether the employer had any goodwill interest in those clients.
In addition, we argued that the agreement was unenforceable because of the unlawful wage deductions. The employer moved for summary judgment on this issue, arguing that it was legitimate to deduct product charges from commissioned employees.
After the court denied their motion for summary judgment, we were able to resolve the case. Client B was paid for the deductions, and continues to provide services out of the location she chose in the first place.
Case Study B: Takeaways
There are a number of lessons to be learned from this example that may be helpful to you if you are facing a non compete dispute. Here are a few:
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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.