LinkedIn has become an essential tool for many professionals. The site provides a platform for making business connections, sending direct messages, gathering marketplace information, and posting updates and content. But the very features that make the site useful for business and career development can also stir up trouble where non-competes and non-solicits are involved.
A number of courts have grappled with the impact of social media sites like LinkedIn on non-compete and non-solicit agreements. Most recently, in Bankers LIfe and Casualty Company v. American Senior Benefits, LLC et al, an Illinois appellate court considered whether a former branch sales manager for a life insurance company violated his agreement not to solicit company employees when he used LinkedIn to make connections with former colleagues after he left to work for a competitor.
Merely inviting a former co-worker to connect on LinkedIn seems a far cry from an improper solicitation—although I have seen lawsuits and cease-and-desist letters based on grounds even flimsier than this. "Non-solicit" does not mean "cut off all contact whatsoever." In this case, however, there was a small twist: The former sales manager had also published a job posting for his new employer on his LinkedIn page that could be viewed by those with whom he was connecting.
Many businesses require top executives and sales professionals to sign non-compete agreements. These individuals typically have access to vital trade secrets or customer relationships that could be used to damage the business if the person leaves to work for a competitor or set up a competing venture.
Increasingly, however, non-competes are used with low-level employees such as fast food workers, customer service representatives, and hair stylists. This practice has met with a flurry of criticism. (For some recent examples, see here, here, and here.) One prominent critic contends that non-competes enable employers to “use the threat of litigation to constrict wages and employee mobility,” and that “[w]orkers bound by noncompetes cannot rely on outside offers and free-market competition to fairly value their talents.”
An opinion from the Michigan Court of Appeals sheds light on the subject. The case, BHB Investment Holdings, LLC v. Ogg (Feb. 21, 2017, unpublished), involved franchises of two competing swim instruction chains, Goldfish Swim School and Aqua Tots. Goldfish Swim School of Farmington Hills (“Goldfish”) sued a part-time instructor who was terminated and went to work for Aqua Tots Canton (“Aqua Tots”) in alleged violation of his non-compete and non-solicit agreements. Goldfish also brought claims against Aqua Tots. The instructor earned $12.50 per hour at Goldfish and $11 at Aqua Tots.
Law and the Creative Economy is the blog of lawyer Maxwell Goss. This blog is for informational purposes only.