Adding to the Employer's Arsenal - Garden Leave
Another strategy employers use to prevent employees from walking away with customers, proprietary information, and trade secrets, is the use of a “garden leave” provision in the employment agreement. Basically, the provision works like this: the employee agrees that they have to provide three weeks notice of their intent to go and work for a new employer. Most clauses then allow for the employee to essentially quit working, but remain on the payroll of the employer during this “transition period.”
The effect of this provision is to prevent the overnight departure of business and proprietary information. If followed by the employee, the employer can contact clients and address the situation. Breach of such a provision could in some instances serve as an additional basis for a temporary restraining order.
Garden Leave provisions coupled with non-solicitation agreements, non-compete agreements and anti-raid provisions can be effective. These types of provisions are appearing more often in the broker/securities business and trace their origins to Europe where they are commonly used. Employers should confirm that any provision is enforceable under applicable state law. Similarly, employees should be very careful before they sign any type of agreement along these lines.
