Restrictive Covenants, But Not Too Restrictive
Corrections or additions?
These articles by Kathleen McGinn Spring and Michele Alperin were
prepared for the March 21, 2001
edition of U.S. 1 Newspaper. All rights reserved.
Help Wanted: Backstage
New Jersey’s professional theaters, non-profits all,
compete for talent not only with film studios, but also with
businesses
of all kinds. Offering less dramatic salaries in many cases, but also
a level of passion that few for-profits can match, New Jersey’s
theaters
are seeking any number of good men and women. On Saturday, March 24,
at 10 a.m. the New Jersey Theater Alliance, the statewide association
of professional, not-for-profit theaters whose mission is promoting
and developing professional theater in the state, holds its 15th
annual
job fair at the State Theater on Livingston Avenue in New Brunswick.
Hoping to turn up technical, marketing, and administrative personnel
— but not actors, not this time — are more than 15 theaters,
including McCarter, the George Street Playhouse, the New Jersey
Shakespeare
Festival, and Passage Theater.
While everyone knows that theaters employ actors, and most
theater-goers
are vaguely aware of box office attendants, ushers, and lighting
technicians,
it takes many more specialties to keep the footlights bright.
Professional
fund raisers are increasingly important as ticket revenues typically
leave a 50 percent or more operating shortfall. Webmasters are in
demand too, and so are education directors, business managers, stage
managers, the company managers who are “responsible for the care
and feeding of actors,” and the house managers who hire and
supervise
ushers and box office personnel.
“In this strong economy, it’s hard to find candidates,” says
Wendy Liscow, NJTA’s director of programs and services.
Corporations
want the same marketing directors that theaters need, and most are
able to pay more. Jobs at the top — technical director,
development
director, and production manager — are now the hardest to fill.
Competition for skilled lighting technicians, master electricians,
carpenters, and costume designers is fierce too. It comes not only
from Hollywood, Liscow says, but also from industrial video houses.
Compounding competition from organizations with fatter hiring budgets,
she says, is the fact that “people are not being trained for the
theater.”
Given a lack of formal training programs, theaters often nurture their
own talent. Starting out as an intern is often the route to top jobs,
and theaters taking part in the job fair will be looking for interns
as well as full-time, part-time, and seasonal employees.
Liscow, a graduate of the University of Michigan, where she studied
theater, began her career as an intern at the Playhouse in the Park
in Cincinnati. She then worked as executive director of the
Pennsylvania
Stage Company in Allentown. “I’ve been steadily working my way
east,” she says. Her next stop was the George Street Playhouse,
where she worked for 12 years “doing everything I wanted to do,
working with wonderful artists on wonderful plays.” She rose to
the position of associate artistic director there, and then, six
months
ago, joined the NJTA. Before working for the organization, which is
headed by Laura Aden, its executive director, Liscow served
on NJTA’s board.
Asked if she has ever thought of leaving the theater for a more
lucrative
career, Liscow says, “I would be liar if I said `never,’ but never
for long.” She says she knows plenty of people who go to work
every day griping, but that her theater colleagues are not among them.
Professionals, or about-to-graduate college seniors, who love the
stage but never thought of the theater as a career will see a plethora
of choices at the job fair. Positions filled at previous NJTA job
fairs include group sales manager, sound engineer, lighting board
operator, carpenter, administrative assistant, production manager,
technical director, and costume designer. Pursuing one of these
careers
here in the Garden State is a good choice, says Liscow. For while
all the world may be a stage, few places offer more professional
theater
work than New Jersey.
— Kathleen McGinn Spring
Top Of PageEmergency Preparedness
Flashback. It’s March 5, and the blizzard is not a
phantom
at all, but rather a barn-burying, wind-pushing monster. And, just
when the Weather Channel’s man in Manhattan, hanging on to a light
pole in an attempt to stay vertical, makes it official — we have
white out conditions! — the power goes out.
If you are responsible for managing apartment houses, office
buildings,
or condo developments, would you have been prepared?
Raymond Perkins, owner of the property management company Harbour
Management of Somers Point, where the phantom blizzard was expected
to raise multi-story waves, has been worrying about disasters of all
kinds since he left teaching in the early 1980s to manage residential
and commercial properties, and marinas too.
Perkins speaks on emergency preparedness on Tuesday, March 27, at
a conference and trade show of the Institute of Real Estate Management
that begins at noon at the National Conference Center at the Ramada
Inn in East Windsor. Cost: $85. Call 856-303-0190. Other speakers
address a variety of subjects of interest to property management
professionals,
including project management, loss prevention and risk, affordable
housing issues, recruitment and retention, and additional revenue
sources.
Perkins, whose worst brush with Mother Nature occurred during
Hurricane
Gloria in 1986, says property managers need to be ready not only for
the blizzards and hurricanes that are touted by the Weather Channel
for days before they occur (or don’t), but also for unscheduled
man-made
mayhem, perhaps a rampage by a disgruntled ex-employee. Among the
advice from this property management expert:
Make a detailed plan. “The main thing I’ve learnedis have a plan in writing somewhere on the property and with keypersonnel,”Perkins says. The plan should list names and emergency contact numbersfor building tenants, notes on anyone who needs special assistance,physical characteristics of the property, insurance policy numbers,names and numbers for utility companies, and phone numbers foremergencyservices. When disaster strikes, Perkins says, there will be no timeto look for this vital information.Drill the plan. “It’s one thing to have a plan, butthe plan needs to be drilled and constantly updated,” saysPerkins.”People change, properties change, codes change.” At leastonce a year, he says, the property manager should assemble a teamand go through emergency procedures. The team could include on-sitepersonnel, workers from other sites, key tenants, emergency servicesprofessionals, and perhaps representatives from the Red Cross orsimilaragencies.Document the disaster. “When you sit down two or threedays later, you won’t remember what happened,” Perkins says. Thisis especially true if the disaster included injuries or death.Nevertheless,it is important that the property manager be able to give a clearaccount to the owner, the insurance company, and perhaps to policeor a court of law. Take notes or make a recording to create a recordof what happened, and of what you did. Included could be the timethe fire department arrived, the time calls were placed for arestorationservice, and a list of tenants and when they were notified.Check for code compliance. Before a disaster strikes,property managers would do well to check federal, state, and localbuilding codes, and to make sure their properties are in compliance.Perkins says a breach could result in denial of insurance claims.Following Perkins’ advice should produce some measure of peaceof mind the next time we are said to be directly in the path of astorm capable of crushing roofs and barricading fire engines in theirstations.Top Of PageRestrictive Covenants, But Not Too RestrictiveCompanies looking to protect their businesses fromfuturecompetition commonly ask new recruits to sign restrictive covenants.Yet potential employees often resent and even refuse to sign thesecovenants, because they perceive the limitations on their futureactivitiesas too wide-ranging. As a result, covenants are becoming much morespecific, as employers seek to protect their own legitimate businessinterests without infringing on a potential employee’s freedom ofaction.Because restrictive covenants can affect a business’ ability tocompetefor qualified employees, their implications should be understood byhigh-level managers and executives — not just by corporatelawyers.Steven Berlin, Beth Cole, and Shacara Boone, allof Buchanan Ingersoll, speak on “Covenants Not to Compete in NewJersey” on Wednesday, March 28, at 8:30 a.m. at the Ramada Innin East Brunswick at a seminar sponsored by Lorman Education Services.Cost: $239. Call 715-833-3940.Restrictive covenants specifically limit the ability of employeesor former employees to compete with an employer, solicit current,former, or even potential customers, solicit or hire co-employeesor colleagues or former colleagues, or utilize and disclose what theiremployer or former employer considers to be confidential informationRestricted covenants have always existed, mostly in service and salesindustries, says Berlin. “An employer does not want to pay anindividual to build relationships and develop a business,” heexplains, “only for that individual to leave, take the fruitsof the employer’s investment, and compete directly against theemployer.”In the past several years, restricted covenants have become morepopularas companies seek to protect huge investments in the development oftechnology-based products or systems and in businesses that aretechnology-based.Once employees learn the technology that an employer has developedor its unique applications in a particular niche, they can becomea competitive danger. In the face of employees’ growing technicalknowledge, “there is a great effort to protect place and positionin the market,” says Berlin.Yet employers must exercise great care in writing restrictivecovenants.In addition to balancing their own legitimate business interests withan employee’s right to earn a living, they must consider thelikelihoodof a court’s enforcing the covenant. The following steps are importantwhen writing a covenant:Determine the legitimate business interests of theemployer .A restrictive covenant that focuses on specific and realisticinterestsis more likely to stand up in court. Before writing a covenant, anemployer should specify exactly what needs protecting. “Employerswant to protect everything about how they do business,” saysBerlin,including intellectual property, technology, what the company doesand how, secrets and formulas, pricing mechanisms, contacts, andbusinessprocesses. Yet when a covenant defines an employer’s interests toobroadly, the courts will be unlikely to enforce it.It’s better to look at the business, and be specific in what needsto be protected — and for how long. For example, an employer mayhave developed a sales force for a particular product and spentconsiderabletime developing contacts and forming relationships with customers.To protect the employer’s specific interests, a covenant would limita sales person from selling to the company’s customers for a periodof time.Avoid being over-inclusive in projecting future businessplans . Consider a company that today sells widgets, but tomorrowexpects to be selling gaskets. A broadly-formulated covenant,specifyingthat “a former employee would be precluded from competing directlyor indirectly with the business of the company,” might protecta potential gasket business but might not be enforceable. A narrower,more effective approach would be to preclude the employee from goingto work for another widget company for a specified time period.Consider the changes brought by technology. “The lawis evolving because circumstances are changing,” Berlin says.If the current technology will be obsolete in six months, courts maynot view a longer restrictive covenant as protecting the company’slegitimate business interests. Says Berlin: “Whatever a particularemployee may know that can be protected may not be relevant in sixmonths.”Analyze what a particular employee does now and is likelyto do in the future . “An employee’s involvement with a companyand its business may be very narrow,” says Berlin. He raises theexample of a public relations and marketing manager for a widgetscompany who is looking for a career change. If the employee goes towork for another widget company in a different capacity, for example,human resources, the employee’s previous knowledge would not imposea risk.Protect the employee’s ability to earn a living. Courtsdo not favor restrictions or limitations on an individual’s abilityto go out and earn a living, and covenants are enforced only to theextent necessary to protect legitimate business interests.Ensure that a covenant does not become an obstacle toeffectiverecruitment . “Employees used to blindly sign restrictivecovenants,”says Berlin, but today they are becoming more sophisticated, and thesigning of a covenant has become a subject of negotiation in therecruitmentprocess. He believes that although employees are uncomfortable withlimitations on future activities, there is usually some version theywill agree to.Consider geographic vulnerability. Because courts indifferentstates and countries variously interpret the general principles andrules about restrictive covenants, a company must be aware of whereit is competitively vulnerable and in what jurisdictions it needsto be protected.Evaluate a court’s likely response. “Courts willevaluatewhether a limitation is too broadly drafted — in terms of nature,time period, and geographic scope — in determining whether toenforce it,” says Berlin. In New Jersey, courts have the optionof performing a “blue pencil revision.” They can redraftlimitsthat they consider broader than necessary to protect legitimatebusinessinterests. “The greater the umbrella of activities that mightbe restricted,” says Berlin, “the greater the risk that acourt is either not going to enforce a covenant because it is sobroad,or is going to rewrite it in a way in which it was not intended.”Berlin graduated in 1977 from the University of Maryland atCollege Park with a bachelor’s in journalism. Since receiving a lawdegree from the Brooklyn Law School in 1980, he has been practicinglaw in New York and New Jersey. Berlin is a New Jersey certified civiltrial attorney and has handled commercial litigation and resolutionof business disputes. For most of the past decade, a significantportionof his practice has been focused on employment law. He has been withBuchanan Ingersoll since September, 1998.Whereas the tendency of employers is towards broad-basednon-competitionagreements, says Berlin, these are often not sufficiently specificto be enforceable by the courts, and they may draw resistance frompotential employees. After careful analysis of risks and benefits,businesses will need to draft covenants that are narrow enough tobe enforceable, yet not so narrow as to provide insufficientprotection.The process is an art, not a science.— Michele AlperinTop Of PageDigital PerceptionsSome men pretending to be women in conversations onthe Internet feel a show of aggressive behavior adds to the appealof their borrowed female personas. The same men have concluded thataggressive behavior by their real-life, male selves is a turn offto women. This is one phenomenon Sherry Turkle examines in herbook “Life on the Screen: Identity in the Age of theInternet.”Hailed as a leading student of social interaction on the Internet,Turkle argues that the medium is having a profound effect on the widerculture.On Wednesday, March 28, at 4:30 p.m. Turkle speaks on “IntimateMachines: Human Identity and `Affective Computing,’” at WolfensohnHall on the campus of the Institute for Advanced Study.Also the author of “The Second Self: Computers and the HumanSpirit,”Turkle is a professor of science, technology, and society at MIT.A graduate of Radcliffe College, she studied with the Committee onSocial Thought at the University of Chicago, and earned a doctoratefrom Harvard.Top Of PagePhiladelphia AngelsOn Tuesday, April 24, more than 150 angel investorswill meet at the Union League in Philadelphia to listen toentrepreneurspitch their business concepts. Entrepreneurs who want to grab theangels’ ears need to submit summaries of their business plans by thisWednesday, March 21. Mail the plans to Angel Venture Forum, c/oSuccessStart, 260 Forest Hills Circle, Devon, PA 19333, or E-mail them tosubmit@ppig.com, re: Angel Venture Fair.The third annual Venture Forum is being hosted by the PennsylvaniaPrivate Investors Group. Also participating are the Private InvestorsNetwork of Washington, D.C., Loosely Organized Retired Executives,a Philadelphia-based group, the Central Pennsylvania Angel Network,and Tri-State Ventures.In the two previous years the event was held, angels in attendancefunded five companies with a total of $4 million. Angel investorscan obtain further information from the Pennsylvania Private InvestorGroup at www.ppig.com.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
