Craig Henry PLC filed suit against Art Eatables alleging that Art Eatables intentionally interfered with a former employee’s new job. This case is a classic example of an employer abusing non-compete agreements to prevent its employees from leaving their job.
Art Eatables is a small Louisville company that makes chocolates, many of which are infused with bourbon. It has retail store locations where it sells these chocolates. In addition, it sells chocolates in other stores and some distilleries in Kentucky.
Our client, Michelle, worked at Art Eatable’s retail stores as a clerk. She stocked shelves, answered customer questions, and operated the cash register. She did not have access to any of Art Eatables secret recipes, company financial information, or other sensitive information. She earned $12.00 per hour. Art Eatables provided her with no benefits: no paid time off, no paid sick time, no health insurance, nothing. She often worked less than full-time hours.
Despite Michelle’s low-level position, Art Eatables required her to sign a noncompete agreement that prevents her from working in any position for any company that is “in the business of selling candy products, including, but in no way limited to, bourbon and/or chocolate candies.” The restriction is in place for 2 years after leaving Art Eatables and covers Kentucky, West Virginia, Virginia, Indiana, Illinois, Ohio, and Tennessee.
Michelle reasonably thought this prohibited her from working for another chocolatier or candy company. Because employment with Art Eatables offered little in the way of financial compensation or advancement opportunities, she began looking for a new job. Michelle had worked in the bourbon industry before and was interested in continuing in that field. She was offered and accepted a position with Heaven Hill Distilleries working as a retail clerk at the Evan Williams Bourbon Experience gift shop in downtown Louisville.
Michelle informed Art Eatables of her resignation and provided a week’s notice. Unfortunately, Art Eatables’ management became very upset. It demanded to know where she was going to work, which Michelle shared with them. Art Eatables’ lawyer sent Michelle a letter with a title in all capital letters: NOTICE OF PENDING LEGAL ACTION. Michelle assumed this meant that legal action against her was actually pending.
In fact, Art Eatables had not filed a lawsuit against her. Instead, Art Eatables sent a letter to Heaven Hill stating that Michelle could not work for it because working at Heaven Hill violated Art Eatables’ noncompete agreement. Heaven Hill withdrew its job offer to Michelle because of the Art Eatables letter, leaving her unemployed.
Michelle filed suit against Art Eatables because its noncompete does not prohibit working for a distillery and because Art Eatables’ conduct cost her the position at Heaven Hill.
Art Eatables maintains that the noncompete prohibits its former employees from working anywhere that sells candy. Since the Evan William’s Bourbon Experience gift shop has a few candy items, employment by Heaven Hill is prohibited. Also prohibited is employment at the Frazier Museum because its gift shop sells candy, the Riot Café, which also has a bit of candy for sale, and the Brown Hotel because its gift shop sells candy. In fact, Art Eatables defines competitive businesses so broadly that it includes Walgreens because Walgreens has a candy aisle. That’s right, Art Eatables takes the position that a clerk at its tiny chocolate store in Louisville cannot work at a Walgreens in Kentucky, Indiana, Illinois, Ohio, West Virginia, Virginia or Tennessee because it is a competitor.
Former employees are also not allowed to work for any of Art Eatables “suppliers.” Not surprisingly, the company takes an unusually broad approach to defining suppliers. In Art Eatables terms, a supplier is “people we buy things from.” An office supply store from which it purchases paper is defined as a supplier. So, under those terms, Heaven Hill is a supplier because Art Eatables has purchased items off the shelf at its gift shop. Any company from whom Art Eatables makes any purchase, even if it is a retail purchase in a store – just like a person going to Kroger – is a supplier.
Art Eatables customers are also off limits and are defined in equally broad terms. A customer is “someone we have sold products to, developed products for, and may or may not do again.” A “customer” may not have made a purchase from Art Eatables for 8 years, but they are still a customer and off limits to any former Art Eatables employee for 2 years.
Noncompete agreements like Art Eatables aren’t about protecting a business. A company that wants to protect its trade secret information can simply require employees sign a nondisclosure agreement that prohibits the employee from sharing confidential information.
An agreement like this – forced on a low-level employee paid less than a living wage and provided with no benefits – serves just one purpose. It keeps the employee from leaving because it makes it incredibly challenging to find a new job. Employees who are not even paid a living wage, who are offered no employment benefits, who do not even work full time, and who have no access to any information of value to a new employer should never be subject to a noncompete agreement. And even in those few situations where a noncompete might be appropriate, nobody should ever be subjected to an agreement like the one Art Eatables foists on its employees.
These agreements are unconscionable. While there are certain situations where a noncompete may be appropriate, Kentucky should limit their applicability. Nobody earning an hourly wage (and certainly nobody earning an hourly wage in an entry level position) should ever be required to sign such an agreement to get a job.
Craig Henry PLC represents employees who are challenging enforcement of noncompete agreements. If you need legal assistance, please give us a call at 502-614-5962.