Model Recruiter And

Model Recruiter and

Account Representative Contracts

State-By-State

Non-Competition and Non-Solicitation Rules

The Tools to Grow a Business - the Power to Shape an Industry!

Prepared by:

Craig Etter

Greenberg Traurig, LLP

Email:

Telephone: 703.749.1315

John Scalia

Greenberg Traurig, LLP

Email:

Telephone: 703.749.1380

Commissioned by:

National Association of Computer Consultant Businesses

1420 King Street, Suite 610

Alexandria, Virginia22314

Business: 703.838.2050

Web:

Mark B. Roberts

Chief Executive Officer

The following materials are provided by TechServe Alliance to its members for informational purposes only and should not be relied upon as legal advice.

Last Updated 2007.

Table of Contents

Enforcement of Employment-Related Restrictive Covenants: Introduction......

State-by-State Chart......

How to Use Map of Each State’s Enforcement Approach......

Model Recruiter Employment Agreement......

Model Account Representative Employment Agreement......

Alabama......

Alaska......

Arizona......

Arkansas......

California......

Colorado......

Connecticut......

Delaware......

Florida......

Georgia......

Hawaii......

Idaho......

Illinois......

Indiana......

Iowa......

Kansas......

Kentucky......

Louisiana......

Maine......

Maryland......

Massachusetts......

Michigan......

Minnesota......

Mississippi......

Missouri......

Montana......

Nebraska......

Nevada......

New Hampshire......

New Jersey......

New Mexico......

New York......

North Carolina......

North Dakota......

Ohio......

Oklahoma......

Oregon......

Pennsylvania......

Rhode Island......

South Carolina......

South Dakota......

Tennessee......

Texas......

Utah......

Vermont......

Virginia......

Washington......

West Virginia......

Wisconsin......

Wyoming......

Enforcement of Employment-Related Restrictive Covenants in the 50 States

Introduction

Employers seeking to have their employees sign restrictive covenants[i] must understand the governing covenant laws of the state(s) in which they may have to enforce those agreements in the event of an actual or threatened violation. The following chart provides a state-by-state summary of the covenant laws of the 50 states, and identifies whether the state prohibits covenants outright, whether the state has a governing statute, the general test the state will apply in determining whether the covenant is enforceable, and whether the state will modify or reform an overbroad covenant to render it enforceable. The chart is intended to be a quick reference tool for employers, and does not purport to constitute a comprehensive analysis of every issue relating to state covenant laws.

As the following chart shows, with a few notable exceptions the vast majority of states allow employment-related restrictive covenants[ii] in varying degrees. Most of those states apply some variation of the same general test: namely, that a covenant will be enforced when it is necessary to protect legitimate business interests of the employer, it is reasonable in duration and geographic scope, and it is not unduly burdensome on the employee or the general public. In determining what constitutes an employer’s legitimate business interests, most states will find the existence of a “protectable interest” when the employer seeks to prevent unauthorized use or disclosure of its trade secrets or other confidential information, or to maintain its customer relationships and goodwill, or if the employer has expended time and resources providing specialized training to the employee. In all such states, the burden is on the employer to establish the reasonableness and enforceability of the covenant; certain states require a higher standard of proof than others (with a few states requiring the employer to rebut a legal presumption that the covenant is void).

Certain states, by statute or court decisional law, prohibit or place certain limitations on restrictive covenants in general, or with respect to particular professions, industries or circumstances. The following chart identifies the main areas where such prohibitions or limitations may exist under governing state law.[iii] With respect to statutes, the chart contains a column identifying whether a state has enacted a statute that prohibits or limits restrictive covenants in general (so-called “statutes of general application”), and a column identifying whether a state has enacted more narrow statutes prohibiting or limiting restrictive covenants in particular industries, professions or circumstances (so-called “statutes of specific application”).

One important legal issue of which employers must be aware is whether, and the extent to which, the governing state’s law will allow a court to modify the terms of an otherwise overbroad covenant in order to enforce it to a lesser extent than as drafted. In general, states take one of three different approaches to this modification issue. Some states take an “all or nothing” approach, refusing to modify an overbroad covenant and thus rendering the entire contract unenforceable. Other states take a more liberal approach, and will rewrite or “reform” an overbroad covenant to render it reasonable and thus enforceable. For instance, under this “reasonable alteration” approach, a court may reduce a five year non-compete obligation to two years and enforce the covenant as so modified. Still other states take a middle-ground approach, in which the courts will strike out or “blue pencil” overbroad provisions - but only if they are clearly severable from the remaining provisions - and enforce the remaining provisions. As an example, a court in a blue-penciling state will not reduce a five-year non-solicitation provision that it finds to be unreasonable in duration, but rather will simply strike the entire non-solicitation provision enforce any remaining provisions in the contract. The following chart and map identify which states apply which of these three approaches.

Approaches to Enforcement of Restrictive Employment Covenants

Model Recruiter and Account Representative Employment Agreements

How to Use

The next few pages contain a model Recruiter Employment Agreement and model Account Representative Employment Agreement. The model Account Executive agreement contains alternative restrictive covenants: a narrowly drafted customer and employee non-solicitation provision for use in those states that take an “all or nothing” approach (i.e., that will refuse to modify an overbroad covenant and thus render the entire contract unenforceable); and an outright non-competition provision for use in those states that take the “reasonable alteration” approach (i.e., that will rewrite or “reform” an overbroad covenant to render it reasonable and thus enforceable ). In states that take an “all or nothing” approach, you need to remove the Non-Compete paragraph from Section 6 (leaving only the Non-Solicitation paragraph in Section 6).Keep in mind that even the narrowly drafted non-solicitation provision may not be enforceable in those states that provide that restrictive covenants are void or presumptively void (i.e., Red States). If a recruiter performs a dual role (i.e. recruiting and sales), you may want to use Section 6 from the model Account Representative Agreement. Brackets in these model agreements indicates that information may need to be inserted, modified or a selection made in accordance with the particular state law being applied.[1]

Model Recruiter Employment Agreement

Use of all or part of this agreement by anyone who is not a member in good standing of NACCB is strictly prohibited.

This Recruiter Employment Agreement (“Agreement”) is made between [Name and Address of Company] (“Employer”) and [Name and Address of Recruiter] (“Recruiter”) and is effective on the ___ day of ______, 200__ (“Effective Date”).

The parties hereto agree as follows:

1. Term of Agreement. This Agreement shall begin on the Effective Date set forth above and shall continue in effect unless and until it is terminated in accordance with the provisions of paragraph 12 of this Agreement.

2. Services Provided by Recruiter. Recruiter agrees to use his/her independent judgment and discretion in performing the following services:

Develop his/her own methods for identifying candidates from a variety of sources and solicit resumes of potential candidates.
Conduct in-depth interviews with potential candidates to evaluate the candidate’s work ethic, sincerity, honesty, interpersonal skills, etc. and to assess the candidate’s ability to work successfully in the Client’s environment based on the candidate’s particular strengths and weaknesses.
Present detailed backgrounds of selected qualified candidates.

Conduct an assessment and determination of potential candidate’s qualifications and background, including education and experience.

For any candidates Client wishes to interview, assist in scheduling interviews and coordinating candidate’s travel plans as necessary.
Negotiate the compensation package within the budget established by the Client as necessary.

Conduct an in-depth reference check to include employment verification, personal and professional reference checking, education verification, and earnings history verification as required by clients internal background check procedure.
Such other services as are generally provided by professional recruiters and which are reasonable for the particular search.

3. Compensation, Deductions. Employer agrees to pay Recruiter the base salary as set forth in the attached Exhibit A, plus incentive pay as may be determined by Employer in its sole and absolute discretion. Employer shall deduct amounts from Recruiter’s compensation only as authorized by applicable law, including amounts attributable to all applicable income tax withholding and Federal Insurance Corporation Act (“FICA”) tax withholding.

4. Benefits. Recruiter shall be eligible to participate in the employee benefit plans offered by Employer under the terms of these plans which may change from time to time at the discretion of Employer.

5. Exclusivity. Recruiter hereby agrees that during the term of this Agreement, Recruiter shall provide full-time, exclusive service to Employer.

6. Restrictive Covenant.

Non-Solicitation. During the term of this Agreement and for a period of [Select 12 or 24] months after the termination of Recruiter’s employment relationship with Employer for whatever reason, Recruiter agrees that he/she shall not, as a principal, employer, stockholder, partner, agent, consultant, independent contractor, employee, or in any other individual or representative capacity:

(1) provide or attempt to provide, directly or indirectly, or advise others of the opportunity to provide, the same or similar services for any Client:

(a) to which Recruiter has provided services in any capacity on behalf of Employer, or

(b) to which Recruiter has been introduced or about which he/she has received information through Employer or through any Client for which he/she has performed services in any capacity on behalf of Employer; or

(2) retain or attempt to retain, directly or indirectly, for him/herself or any other party, the services of any person, including any of Employer’s employees and independent contractors, who were providing services to or on behalf of Employer while Recruiter was employed by Employer, and to whom Recruiter has been introduced or about whom Recruiter has received information through Employer or through any Client for which Recruiter has performed services in any capacity on behalf of Employer.

For purposes of this paragraph 6, the term “Client” includes any affiliates, customers and clients of Employer’s Clients.

7. Payment of Expenses. Employer shall reimburse Recruiter for ordinary and necessary expenses incurred in the course of performing services under this Agreement provided that Recruiter submits a written request in advance for approval of such expenditures and Employer approves such written request. In order to receive an approved reimbursement, Recruiter shall present Employer with a completed Employer Expense Form and supporting receipts and vouchers and any further documentation that Employer may request.

8. Reports. Recruiter shall provide oral or written status reports as requested by Employer.

9. Confidentiality and Nondisclosure. Recruiter acknowledges that confidential information and materials regarding Employer and its Clients have been or will be disclosed to Recruiter solely for the purpose of assisting Recruiter in performing his/her duties under this Agreement. Such information and materials are and remain the property of Employer and its Clients respectively. Recruiter may use such confidential information and materials only during his/her term of employment and solely for the purpose of such employment; however, such right expires upon the termination of Recruiter’s employment for any reason. Recruiter therefore agrees not to use Employer’s or Client’s confidential information for his/her own benefit, or for the benefit of any other person, except as specifically authorized in writing in advance by all owners of such information and materials, or divulge to any person for any reason, any such information and materials related to the business of Employer, any of its Clients, or their customers, clients and affiliates, both at any time during the term of this Agreement and at any time after its termination.

10. Return of Property. Employer directs and Recruiter agrees that upon termination of this Agreement, Recruiter will deliver to Employer all keys, pass cards, identification cards, listings, policy and procedure manuals, memos, letters or other documents or materials of any nature in Recruiter’s possession or control that were given to Recruiter by the Client or by Employer and that relate to Recruiter’s employment with Employer.

11. Remedies for Breach. Recruiter agrees that money damages would be an inadequate remedy for any breach of paragraphs 5, 6, 9 and 10, regarding, respectively, exclusivity, restrictive convenants, confidentiality and non-disclosure, and return of property, because damages for such breaches are not susceptible to exact measurement in dollars. Therefore, Employer shall be entitled to temporary restraining orders, temporary injunctions and permanent injunctions to prohibit such breaches. This paragraph in no way limits the remedies Employer has at law or equity for breaches by Recruiter of any of the paragraphs mentioned in this paragraph or of any other provision of this Agreement.

12. Employment At-Will/Termination. Consistent with the provisions set forth herein, the parties acknowledge and agree that the employment relationship created by this Agreement is at-will. Either party may terminate this Agreement at any time, with or without cause.

13. Effect of Agreement. This Agreement shall inure to the benefit of and shall be binding on the parties hereto, the successors, heirs and personal representatives of Employer, and the heirs and personal representatives of Recruiter. Recruiter’s rights, obligations and duties under this Agreement shall not be assigned by nor are they assignable by Recruiter. Termination of employment as provided in paragraph 12 shall terminate this Agreement except that paragraphs 5, 6, 9 and 10 shall remain in effect.

14. Entire Agreement. This instrument contains the entire Agreement of the parties and supersedes and terminates all prior agreements between the parties. Any modification of this Agreement shall not be effective unless in writing and signed by Recruiter and by an officer of Employer.

15. Severability. Each provision of this Agreement shall be considered severable such that if any one provision or clause conflicts with existing or future applicable law, or may not be given full effect because of such law, this shall not affect any other provision of the Agreement which, consistent with such law, shall remain in full force and effect. All surviving provisions shall be construed so as to effectuate the purpose and intent of the parties.

16. Governing Law/Forum Selection/Waiver of Jury Trial. This Agreement shall be construed and enforced according to the laws of the State of [______][INSERT APPLICABLE STATE], except for its choice of law principles, regardless of where the work is performed. With respect to any litigation based on, arising out of, or in connection with this Agreement, the parties hereby expressly submit to the personal jurisdiction of the state and federal courts in, of or for the county of [______][INSERT APPLICABLE COUNTY] in the aforementioned state. The parties hereby expressly waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above, including without limitation any claim that any such litigation has been brought in an inconvenient forum. The parties hereby waive trial by jury, and agree to trial by bench, to the maximum extent allowable by law.

17. Attorneys’ Fees. Recruiter agrees that if Employer is successful in whole or part in any legal or equitable action against Recruiter related to or arising out of this Agreement, Employer shall be entitled to recover from Recruiter all of its costs incurred in such action, including reasonable attorneys’ fees.

18. Waiver. The failure of any party at any time to insist on strict performance of any condition, promise agreement or understanding contained in this Agreement shall not be construed as a waiver or relinquishment of the right to insist on strict performance of the same condition, promise, agreement or understanding at any future time. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the person against whom it is sought to be enforced.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first written above.

Employer:[INSERT COMPANY NAME]

By:______

[INSERT NAME]

[INSERT TITLE]

Recruiter:______

[INSERT NAME]

EXHIBIT A

Recruiter’s initial annual base salary shall be $ ______.*

*[NOTE TO EMPLOYER: This amount must be at least $ 455.00 per week and paid on a salary basis (i.e., not hourly) if you are classifying the recruiter as exempt from overtime pay under the administrative employee exemption. In addition, the recruiter must exercise sufficient independent judgment and discretion in order to qualify for the administrative employee exemption.]

Model Account Representative Employment Agreement

Use of all or part of this agreement by anyone who is not a member in good standing of NACCB is strictly prohibited.

This Account Representative Employment Agreement (“Agreement”) is made between [Name and Address of Company] (“Employer”) and [Name and Address of Account Representative] (“Account Representative”) and is effective on the ___ day of ______, 200__ (“Effective Date”).

The parties hereto agree as follows:

1. Term of Agreement. This Agreement shall begin on the Effective Date set forth above and shall continue in effect unless and until it is terminated in accordance with the provisions of paragraph 12 of this Agreement.