Monday, December 04, 2006

Who protects the guards?

Under no circumstances should any part of this post be construed as legal advice.

The Courant has a story today on the changing of the company that provides security to ESPN in Bristol:

At 12:01 a.m., her employer, Guardsmark LLC, which had supplied sentries at the sports television network's Bristol headquarters for years, yielded to a rival, having lost a recent bidding contest.
...
Securitas USA, the incoming security contractor, wanted to hire nearly all the outgoing Guardsmark guards, who numbered about 140 as of late October. ESPN also wanted them to stay.

The problem was Guardsmark's contract with its employees.

Last month the firm, based in New York and Tennessee, announced that it would strictly enforce a provision of the guards' employment contracts forbidding them from working for rivals at sites where they had worked for Guardsmark in the previous 12 months.


The article notes that this type of non-compete clause has been successfully defended in Connecticut and elsewhere. Generally, non-compete clauses are judged on their reasonableness as to time and location of the restriction. Also, each non-compete clause is to be judged by the circumstances of the clause (for example a non-compete for an executive at Target that prevents him/her from going to rival Wal-Mart might be judged reasonable even though thousands of miles separate the headquarters because the stores directly compete. A non-compete that prevented a manager from a five-and-dime store in Minneapolis, MN from moving to a five-and-dime in Bentonville, AR would most likely be judged not reasonable).

Here, while the time of 12 months is almost certainly reasonable, the evaluation of location is different: The two companies compete, but the competition as to the specific location is complete at the time that one company would want to hire workers from the other company. Guardsmark has already lost the ESPN contract at the time that it prevents the employees that it hired to guard ESPN from moving to its successor company, Securitas USA.

Guardsmark claims that the clause is necessary to prevent being underbid by a rival who knows they will not have to pay recruiting and training costs. Fair enough (although Guardsmark would have the same advantage in its bidding and not having that advantage did not prevent Securitas from winning the bid), but who is hurt here is Guardsmark's own employees:

Guardsmark said it wanted to place every one of its guards elsewhere, and was "working diligently" to do so. Securitas backed off and brought in new guards.

But by Friday Guardsmark had abandoned at least 40 of its ESPN guards, telling Attorney General Richard Blumenthal through a lawyer that it would make no effort to place them, according to Blumenthal.

As of Friday afternoon, 44 of 123 guards still stationed at ESPN facilities had been offered work elsewhere with Guardsmark, said Blumenthal, who took up their cause last month and is considering further action. Some of the new job opportunities are out of state.


So between 40 and 80 of the former guards have to look for new employment and even the guards who were placed may have to move their families out of state or choose to find new employment, all because of the non-compete clause.

Attorney General Blumenthal has threatened legal action and is considering introducing legislation that prevent this type of non-compete clause. I have a call in to the AG's office to see what types of legal action they are considering (I will update when I get a response).

He hits it right on the head though when he notes that Guardsmark is using its employees to make life harder for its competitors - its competitors will hire new workers and recover, its employees may not.

3 comments:

Anonymous said...

I think a Non Compete Clause for a Security Officer Position is totally insane. These are hard working people it isnt a big political job or something.

I hope the Guards fight it in court and win

BOB IN THE NOTCH said...

I hope the fine folks at WALT DISNEY COMPANY (ESPN's parent) are real satisfied with the mess they've created out of these hard working people's lives. Be honest - could the new contract be that much of a savings over the prior deal. It's 99% labor costs. Greed put this crisis into motion.

The Governor ought to step in and put the weight of her office into the mix and back the guards promptly.

Anonymous said...

If the Security guards have only done security work in the past several years couldn't they contest the noncompet. If that is the only work that they have done and it is their only source of income?