Non-Competition requires “Consideration”

Non-Compete and other restrictive covenants (contracts) are generally enforceable in Kentucky if they are reasonable in geographic and temporal scope and as long as they are supported by “consideration”. These restrictions are contracts which therefore that must be supported by consideration, e.g. something new of value. For a new employee, the offer of employment is sufficient consideration.

When the employer requires an existing employee to sign a non – compete, particularly if it contains additional restrictions, new consideration is required such as a raise, bonus or some other compensation or benefit to the existing employee.

Any employer planning to require existing employees to sign a new Non- Compete (or Non-Solicitation or confidentiality provision) should plan any such initiative carefully.

Wages Defined: Commissions, Vacation Pay and Bonuses under Kentucky Wage and Hour law

The Kentucky Wage and Hour Act contains a definition of wages to include “any compensation due to an employee by reason of his or her employment, including salaries, commissions, vested vacation pay, overtime pay, severance or dismissal pay, earned bonuses and other similar advantages agreed upon by the employer and employee or provided to employees as an established policy.”

When vacation may be vested or when bonuses and commissions are “earned” and therefore payable as wages can be problematic but the employers’ best defense is to commit such benefits entitlement (or non entitlement) to writing or at least as a general company policy. If the employer requires all vacation time to be used before separation of employment, or it intends that no commissions received by the employer should be paid post separation, it should clearly express that policy.

Wages must be paid within 18 days of the last day worked and the failure to pay wages may subject the employer to liability for the wages and an equal amount as liquidated damages plus the employee’s attorney fees.

FMLA-Good Faith Belief Defense

Under the FMLA, an eligible employer (with more that 50 employees in a 75 mile radius) may not interfere with, or retaliate against, any eligible employee. Retaliation requires a demonstration that the Employer was motivated by retaliatory intent.

The 6th Circuit Court of Appeals has recently held that a belief that is “reasonably grounded on particularized facts”, that the employee’s request for FMLA was fraudulent or sufficiently suspicious that the employer denies the request may be a defense to the subsequent FMLA -even if the suspicions are not subsequently proven.