Delaware Superior Court Approves “Garden Leave” for NDA and Non-Compete Agreemetns

To combat the increasing restrictions in non-compete agreements, legislators throughout the United States have been passing laws to limit what restrictions employers can put in their non-compete agreements with their workers, or even whether they can use non-compete agreements at all. California has refused to recognize any non-compete agreements, and other states have followed suit. A federal law limiting or banning non-compete agreements does not exist, though bills on the issue have been proposed.

The latest tactic used by employers to get around the restrictions placed on non-compete agreements has been something called “garden leave”. Garden leave is when an employee gives notice of the termination of their employment with that business and spends some or all of their notice period away from the office, but remains on the company’s payroll.

The idea behind garden leave is to lift some of the burdens of non-compete agreements off the shoulders of the employee. As workers and workers’ rights activists have complained that non-compete agreements often made it overly difficult, if not impossible, for employees to find work anywhere else, some companies have started using garden leave as a way of easing that burden without getting rid of their employees’ non-compete agreements altogether.

In most cases, the non-compete clause of an employment contract would need to specifically state that it could place a worker on garden leave after their employment was terminated, but after a recent employment lawsuit in Delaware, that might no longer be the case (at least in Delaware).

A physician in Delaware recently sued the medical practice he used to work for after the practice put him on garden leave for the final four-and-a-half months of his contract’s six-month non-compete clause. He argued that made the non-compete clause invalid because the clause did not make any explicit references to garden leave, but the Delaware Superior Court disagreed.

On the contrary, the Court argued that, by suing his former employer, the physician was effectively saying he intended to violate his contract with the medical practice and that the lawsuit was his way of trying to get out of his financial liability for breach of contract.

Prior to this decision, the Delaware Superior Court had always required non-compete clauses to specifically describe the terms of garden leave in order to use garden leave, but that was not the case here. As a result of this decision, other employers in Delaware might be able to use garden leave, even if their employment contracts don’t say anything about it, so Delaware workers should be aware that they might be put on garden leave, regardless of whether it’s described in their employment contracts.

If you’re trying to switch employers and you’re worried that a non-compete clause might be used to prevent you from doing so, consult with a qualified employment attorney who can look over the contract and inform you of your options. That said, the best time to have an attorney look over your contracts is before you sign them, so if your new employer has an employment contract for you to sign, have an attorney look it over first. The same advice holds true any time your employer tries to update or make changes to your employment contract. Knowing what your options are ahead of time can make it that much easier for you to make career changes in the future.

Whether you are a business owner who is or is considering asking workers to sign a non-compete or non-solicitation agreement or a worker being asked to sign such an agreement, it is always advisable to seek the assistance of an attorney experienced in non-compete law. The Elmhurst and Oak Brook non-compete agreement attorneys at Lubin Austermuehle are among the best non-compete attorneys in the Chicagoland area with over thirty years of experience defending and prosecuting non-compete agreements and unpaid wages and a wide variety of other business dispute lawsuits arising between physicians in the same medical practice. Lubin Austermuehle a firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat.

Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Evanston and Skokie business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago, Cook, and DuPage County area businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333 or our toll-free number (833) 306-4933.  You can also contact us online here.

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