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Contract requires lengthy advance notice of resignation? It may not be valid

by on
in Employment Law,Human Resources

For key personnel, it’s customary to have employment contracts specifying the terms and conditions under which the employees will work, compensation terms and other details, such as a noncompete and trade secrets clause. Plus, the agreements may specify how much notice key employees must give before they leave for other jobs.

Have your attorney carefully review these terms and conditions before the contract is signed to make sure it meets with Georgia contract law. In some cases, for example, restrictions may be too draconian and won’t be enforced by a court.

Recent case: Jack Carvalho and Samuel Yates worked for Credit Suisse as investment advisors. Both had signed employment agreements outlining the terms and conditions of their employment.

Buried in the agreements were clauses that required both to tell Credit Suisse far in advance if they intended to quit. Credit Suisse classified the clauses as termination notice provisions, not as noncompete clauses. They required the advisors to stay on the company’s payroll for a certain period and not work for anyone else. In exchange, they would be paid their base salaries.

The men protested that the requirements were really noncompete clauses intended to keep them from working elsewhere. Although they would be paid their base salaries, they would not earn commissions, which ordinarily far exceeded their base salaries. Basically, Credit Suisse could cut their earnings while preventing them from working elsewhere for a long time.

The court refused to enforce the clauses and sent the rest of the dispute to arbitration. (Carvalho, Yates v. Credit Suisse, No. 1:07-CV-2612, ND GA, 2007)

Final note: Always have an attorney review employment contracts. A good lawyer can draft the agreement to be legally binding and provide the maximum protection from future competition—without running afoul of the law.

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