Here’s a shot of Downtown Grand Rapids I took today from the Amway Grand Plaza Skywalk.
A month ago I posted on non-compete agreements.
As mentioned before, I am thankful for Judge Yates with the Kent County Business Court who issues a lot of opinions on this area. In fact, he issued one just a few days ago that is helpful:
You can check out this December 3, 2019 Temporary Restraining Order issued by the Kent County Business Court.
In this instance, a local hair salon (where I used to get my hair cut until they moved from downtown) had their stylists sign non-competes.
The stylists left their employer to work with a competitor. The salon filed an Ex-Parte TRO to stop the stylists from working for a competing hair salon.
The Court, in its opinion, granted in part and denied in part the Salon’s request. The Court (at least before a hearing on the evidence) allowed the stylists to work for a competitor and limited the TRO simply to prohibit the stylists from soliciting customers of their former employer.
A broad takeaway from this brief opinion – yes, non-competes are generally enforceable, but not in all cases. The restrictions must be reasonable.
A question to ask: Is it reasonable to prohibit a hair stylist from going to another salon and using the stylists’ general knowledge and skill to cut hair somewhere else?
Is a business really harmed by this type of competition?
Trending to protect low-wage workers from unreasonable restrictions.
Just recently, Michigan’s Attorney General joined the Attorney Generals of several states in a letter to the FTC dated November 15, 2019 to ” to urge it to use its rulemaking authority to bring an end to the abusive use of non-compete clauses in employment contract.”
This isn’t a recent phenomenon. Several years ago Jimmy Johns was sued by a State Attorney General for its use of non-competition agreements to restrict employees rights to “make sandwiches” for a competitor.
Earlier this year the Legislature proposed a bill to restrict non-compete agreements with “lower-wage” employees – defined generally as $15.00/hr or $31,000 annually.
This bill has made some progression.
You can check out the House Fiscal Agency’s January 15 Analysis of the House Bill Substitute.
According to the Report, the changes to the Bill surround the definition of “Low-Wage Employee”
Low-wage employee would mean either of the following:
1. A minor.
2. An employee, as defined in section 203 of the federal Fair Labor Standards Act who receives annual wages from the employer (excluding overtime) at a rate less than 138% of the last published federal poverty line for a family of three. The bill would require the Department of Labor and Economic Opportunity (DLEO) to keep this rate posted on its public website.
It seems there is a growing trend to protect employees from unreasonable restrictions on the ability to work. States are pushing for limitations on non-competes against employees – particularly employees in lower skilled jobs.
And it is hard to argue with sensibility of binding “sandwich artists” or “hairstylists” from making a living. That being said, under Michigan law non-competes are general enforceable.
MCL 445.774a provides:“1) An employer may obtain from an employee an agreement or covenant which protects an employer’s reasonable competitive business interests…”
Questions? comments?
email: Jeshua@dwlawpc.com
Twitter: @JeshuaTLauka
Purpose Driven General Counsel 