Legal Eaze #76 Non-Competition Clause/Not Credited For Made Up Time

Title: September 3, 2007

Q. My brother bought a “roach coach” business. He paid good money for 3 trucks, the routes and included a no-compete clause so that the company he bought the business from would not get back into the same business within 5 years from the sale. That business is now back in business, operating on the same routes that were sold to my brother only 2 years ago, and taking business away from my brother. What should he do?

A. I believe your brother should sue that company. Usually non-competition clauses are enforceable as long as they are not overly restrictive. For example, not permitting the operators of that company to re-open in the same area the business was previously operating simply protects your brother’s investment in purchasing the company. The enforcement of non-compete clauses in business-sale contracts depends upon the notion that part of what the buyer is paying for is the goodwill of the business (defined as the expectation of future public patronage) and by competing, the seller is unfairly undermining the value of the goodwill for which he was paid. Here your facts make it clear that part of what your brother bought and paid for was “the route”, and if the seller is going after his old customers on the route, that would violate a typical non-compete clause and could be the basis for a successful lawsuit.

Q. One of my co-workers took off a half day last week. He made it up this week. He was then told by our supervisor that because he failed to notify him of the switch, he would not only be docked for the time he missed, but would also not be credited for the made-up time. Is this legal?

A. The employer must live up to its agreement with the employees when a worker needs time off. The contract covering a particular pay or benefits provision does not necessarily have to be written down. However, if there is a written policy, a past practice, a general understanding, that alone may be deemed to be the contract between the parties as to that particular practice. Hence, a particular practice will generally not be against the law most of the time, but failure to honor a practice in an arbitrary or discriminatory manner is likely to be a breach of contract, a civil wrong addressable not through the Labor Commission but through a private lawsuit.

Maxine de Villefranche is an attorney and civil general practitioner with 14 years of experience. She practices law from her Tehachapi office as well as her Lancaster satellite office. She will answer legal questions posed to her by the readers to the best of her abilities. Email your questions to maxinedev@msn.com or fax to (661) 825-8880