When non-compete contracts get out of hand


When non-compete contracts get out of hand

Feb 01, 2011
By dvm360.com staff

Readers who follow this column know that I'm no left-wing zealot. I'm not big on labor unions, and I believe the French are overdoing it by rioting in the streets because their mandatory six-week annual vacation may be at risk. On the other hand, there are times when the rank-and-file worker and his rights must be respected. There are circumstances in the work world (including the veterinary clinical practice work world) that seem plainly unreasonable. Here's one that took me by surprise the other day: a pet clinic receptionist with a written and executed non-compete and non-solicitation contract.

I shuddered to think just how bad the unemployment situation must be if veterinary practices are in a position to demand this type of documented commitment from a person whose wages are unlikely ever to breach the $15 per hour mark. I began wondering just how far this trend would progress. Next week should I expect pleadings to arrive from some equine referral practice seeking to enjoin their former stall maintenance engineer from shoveling manure for a nearby competitor?

Does common sense prevail nowhere? Receptionist non-compete/non-solicitation agreements surely must represent the worst mercenary tendencies in veterinary practice today. I would like to share the time-honored legal principles which shape contract common law in the United States which support my position:

Let's think about the colossal disparity in bargaining power. Under the British common law which we inherited in large part after the Revolution, there has traditionally been if not favoritism, at least perhaps, enhanced attention to fairness demonstrated by the courts toward those who enter contracts but are in a very weak bargaining position.

For example, courts tend to bend over backwards to make sure that landlords are meeting their obligations before levying sanctions against poor residential tenants. The same "bending over backwards" often is made available to indigents who fail to make timely payments on their "signature loans" made at high interest rates for short terms by welfare lenders.

Color me cynical, but it doesn't seem appropriate that a person who is looking for a job as a pet hospital receptionist should have to sign any rights-restricting documents whatsoever. Their contractual bargaining power is zip. Particularly in a dire economy such as the one which we have been experiencing over the last few years, it seems to me that job applicants looking to fill a front-counter position will do just about anything they are asked if they believe it will secure them a paycheck.

And as far as I know, the average receptionist candidate who signs a non-compete or non-solicitation agreement rarely is offered the generous golden parachute contract offered to big-bucks executives who agree to the same sort of restrictions in industry and business.

Another issue is the cost of litigation, which has a chilling effect on any receptionist who agrees to a non-solicitation agreement as part of the hiring process. For example, consider Betsy the receptionist who signed a non-compete/non-solicitation agreement two years ago when she was hired at Super Healthy Pets Conglomerate. In the economic downturn, she has been refused any pay raises and really needs to change jobs to another local practice. But she is deterred from taking another local job because she doesn't understand the limitations placed upon her by her previously signed non-compete. Furthermore, she doesn't have the money to hire an attorney to interpret the document.

And if she borrows the money for a legal consultation and discovers that the contract prohibits her from doing receptionist work elsewhere, there is no way she will be able to afford to defend a suit by Super Healthy Pets. As a result, she has to keep working there or take a job out of town causing her to incur travel expenses she cannot afford.

Finally, I fail to see a justification for imposing labor restrictions on rank-and-file veterinary hospital employees who routinely make less than $15 per hour. It is difficult to imagine that a practices have legitimate interest in limiting the job opportunities available to receptionists. If a front-office staff member's relationship with a client or a co-worker is so excellent that such a friend would actually follow her from one animal hospital to another, that fact tells me two things. First, it says that the individual is performing her duties in an outstanding way and is so terrific that it is inevitable that she would develop a following. That type of great performer should be free to move locations in order to better herself and her economic well-being.

Second, if a co-worker or client were willing to abandon a practice to follow the receptionist, it indicates that the veterinary care or practice environment of the first hospital is so average and nondescript that the departure of a single lay staff member could make the difference as to whether other staff and clients there remain loyal.

To summarize, perhaps we should remember that non-compete or non-solicitation agreements should be designed to protect the viability of a business' service or product. Let's not lose sight of the fact that at a veterinary practice, the nature of the business to be protected through the use of non-competition agreements is veterinary services, not receptionist services.

Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians. Call (607) 754-1510 or e-mail