employee choice doctrine

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The Delaware Supreme Court recently clarified that forfeiture-for-competition clauses under the Employee Choice Doctrine may be enforceable against a broader range of employees, including middle managers, not just senior-level executives or more highly compensated employees. These clauses require employees to forfeit certain benefits—such as stock options or severance pay—if they leave their employer and subsequently work for a competitor. Unlike…

Continue Reading Freedom to Compete, But at a Cost: Delaware Signals Forfeiture Clauses Could Be a Viable Non-Compete Alternative

By Marcus Mintz

A New York Supreme Court recently affirmed the viability of the “employee choice doctrine” in a rescission action involving employee equity grants.  See Lenel Systems Int’l., Inc. v. Smith, 106 A.D. 3d 1536, 966 N.Y.S.2d 618 (N.Y. App. Div. 2013).  The “employee choice doctrine” arises when an employee has a choice between complying with post-employment obligations, …
Continue Reading Comply or Lose: New York Affirms Enforcement of Non-Compete in Rescission Action for Employee Equity Grants

Under Texas law, a restraint on competition without reasonable time and geographical limitations is unenforceable. Although New York generally disfavors an unreasonable non-competition covenant, there is an exception under the employee-choice doctrine. A recent Texas appellate court panel, applying Texas law, reversed a lower court order declaring valid under New York law an employment contract provision imposing a substantial penalty…

Continue Reading Texas Appellate Court Voids, As Contrary to Fundamental Texas Law, Incentive Compensation Contract Imposing A Substantial Penalty For Post-Employment Competition With The Ex-Employer