Last week we considered the implications of the Supreme Court’s recent non-compete opinion.  A few additional thoughts on the pros/cons of arbitrating non-competes:

  • The majority of non-compete or non-solicit cases will resolve themselves at the temporary restraining order or temporary injunction level – meaning these disputes are often going to be resolved by the first tribunal that considers them whether it is an arbitration panel or judge;
  •  The odds are that if an employer is successful with a judge on a temporary injunction, they will not compel arbitration and vice-versa;
  • Because of this it is useful to try to craft some type of non-compete that will preserve the right of the employer to either stay with the judge or move to arbitration if they are unsuccessful – this is not easy;
  •  From an employee’s perspective you always need to consider the fact that an arbitration is usually going to be more expensive for them as they pay some portion of the arbitration fee; 

Every employer needs to consider what a likely non-compete dispute is going to look like in their industry.  If it is going to be a situation where they need immediate relief, which is the case most often seen, they are probably going to be dealing with a state or federal judge on a temporary restraining order or temporary injunction to stop the conduct immediately.  The question then becomes after this period of the case is over, do they want to stay with that judge or move to arbitration?  There is no one size fits all to this question.  The challenge is to craft the proper arbitration provision to address the company’s situation or go without.  There are alternatives to arbitration, such as jury trial waivers, that may accomplish the same goals.