Agreements that restrict when and where an individual can work after leaving a company -- known as noncompete or noncompetition agreements -- are highly scrutinized by courts. Why, because the right to earn an income is considered very beneficial not only to the individual but to the success of society itself. While the courts do not favor agreements of this type, they are allowed when carefully drafted.
One healthcare company realized the results of careful drafting when a court upheld a noncompete agreement that ultimately resulted in a $6.89 million jury verdict in favor of the healthcare company.
The lawsuit was brought after five employees left Horizon Health Corp., a subsidiary of Psychiatric Solutions, which was acquired by Universal Health Services and how the claims relating to those employees fell into court in complaints filed by UHS. The employees later went to work for another healthcare company, Acadia Healthcare -- one that UHS considered competition.
When UHS learned of the collective new positions, the company brought claims in federal court. The complaint named the five former employees as well as Acadia Healthcare as defendants and including claims that the defendants not only violated the noncompete agreements that they had voluntarily signed, but that they misappropriated confidential information. The noncompete agreement was upheld in court and the jury believed the claims made by the former employer, resulting in an almost unprecedented $6.89 million award.
In many other instances, unfortunately noncompete agreements that were not carefully drafted and considered invalid for one reason or another -- more often than not for being overly broad -- can lead to serious problems for companies that thought they were protecting their interests when drafting the agreements.
Source: Modern Heatlhcare, "UHS wins $6.89 million verdict against ex-employees, Acadia Healthcare," Beth Kutscher, Dec. 22, 2012
Every word chosen in a contract is important to the future interests and success of a business. Our experienced California contract law attorneys are equipped with the experience necessary to negotiate effective contracts between businesses, consumers and employees.
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