ABA Banking Journal - July 2010 - (Page 16) ABA Community BAnking | empLOymeNt AGReemeNts “ oncompete” N must-knows A As key players come and go, banks, bankers, and directors all have a stake By Heidi A. GuttAu-Fox s a director for my family-owned community bank in Iowa and a labor/employment practice attorney, I have seen some banks use noncompete agreements quite effectively. However, others often don’t use them as they might. In this volatile economy and with the many changes confronting banks, including, in many cases, layoffs or terminations of key employees, banks should be taking advantage of this tool critical to protecting their goodwill. Every bank should be evaluating: • Whether they need to implement noncompete agreements with key employees (using enforceable state-specific language). • Whether they must update noncompetes already in place to ensure enforceability. • Whether incoming employees are abiding by noncompetes with their former employers. • Whether outgoing employees are honoring their valid noncompete agreements. On the flip side, individual bankers, CEOs, and other key employees need to know their options before entering such agreements. They need to know how to deal with noncompete agreements during changes in employment. Competitive armor for your bank An enforceable noncompete agreement can benefit your bank in many ways. For example, such agreements are vital to protecting your bank’s goodwill and preventing unfair competition by key employees who are terminated or leave on their own. Noncompetes protect bank customer relationships, which it paid the departing employee to develop for its benefit. Assuming that the bank has an enforceable agreement, there are several remedies which banks can pursue if a former employee violates an enforceable noncompete agreement. These remedies include: injunctive relief (a court order prohibiting the employee and/or the employee’s new employer from violating the agreement) and monetary relief, in the form of recovery of revenues lost due to the employee’s violation of the noncompete agreement. Importantly, if your bank has been harmed by an employee’s violation of a noncompete agreement, it should act swiftly in pursuing legal action. This ensures that there is no appearance of acquiescence in the former’s employee’s actions. Enforceability is key. Because state laws vary 16 | ABA BANKING JOURNAL | july 2010 Table of Contents for the Digital Edition of ABA Banking Journal - July 2010 ABA Banking Journal - July 2010 Contents Chairman’s View Editor’s Column The Economy Bank Notes “Noncompete” Must-Knows Of Mutual Interest Pass the Aspirin Tech Topics What’s PayPal Up To? Brother, Would You Take a Lease? Compliance Clinic Compliance Inbox ABA Resources Investment Management Surveys & Trends First Person ABA Banking Journal - July 2010 ABA Banking Journal - July 2010 - ABA Banking Journal - July 2010 (Page Cover1) ABA Banking Journal - July 2010 - ABA Banking Journal - July 2010 (Page Cover2) ABA Banking Journal - July 2010 - ABA Banking Journal - July 2010 (Page 1) ABA Banking Journal - July 2010 - Contents (Page 2) ABA Banking Journal - July 2010 - Contents (Page 3) ABA Banking Journal - July 2010 - Contents (Page 4) ABA Banking Journal - July 2010 - Contents (Page 5) ABA Banking Journal - July 2010 - Chairman’s View (Page 6) ABA Banking Journal - July 2010 - Chairman’s View (Page 7) ABA Banking Journal - July 2010 - Editor’s Column (Page 8) ABA Banking Journal - July 2010 - Editor’s Column (Page 9) ABA Banking Journal - July 2010 - The Economy (Page 10) ABA Banking Journal - July 2010 - The Economy (Page 11) ABA Banking Journal - July 2010 - Bank Notes (Page 12) ABA Banking Journal - July 2010 - Bank Notes (Page 13) ABA Banking Journal - July 2010 - Bank Notes (Page 14) ABA Banking Journal - July 2010 - Bank Notes (Page 15) ABA Banking Journal - July 2010 - “Noncompete” Must-Knows (Page 16) ABA Banking Journal - July 2010 - Of Mutual Interest (Page 17) ABA Banking Journal - July 2010 - Of Mutual Interest (Page 18) ABA Banking Journal - July 2010 - Pass the Aspirin (Page 19) ABA Banking Journal - July 2010 - Tech Topics (Page 20) ABA Banking Journal - July 2010 - Tech Topics (Page 21) ABA Banking Journal - July 2010 - Tech Topics (Page 22) ABA Banking Journal - July 2010 - Tech Topics (Page 23) ABA Banking Journal - July 2010 - Tech Topics (Page 24) ABA Banking Journal - July 2010 - Tech Topics (Page 25) ABA Banking Journal - July 2010 - What’s PayPal Up To? (Page 26) ABA Banking Journal - July 2010 - What’s PayPal Up To? (Page 27) ABA Banking Journal - July 2010 - What’s PayPal Up To? (Page 28) ABA Banking Journal - July 2010 - What’s PayPal Up To? (Page 29) ABA Banking Journal - July 2010 - Brother, Would You Take a Lease? (Page 30) ABA Banking Journal - July 2010 - Brother, Would You Take a Lease? (Page 31) ABA Banking Journal - July 2010 - Brother, Would You Take a Lease? (Page 32) ABA Banking Journal - July 2010 - Brother, Would You Take a Lease? (Page 33) ABA Banking Journal - July 2010 - Compliance Clinic (Page 34) ABA Banking Journal - July 2010 - Compliance Clinic (Page 35) ABA Banking Journal - July 2010 - Compliance Clinic (Page 36) ABA Banking Journal - July 2010 - Compliance Inbox (Page 37) ABA Banking Journal - July 2010 - ABA Resources (Page 38) ABA Banking Journal - July 2010 - ABA Resources (Page 39) ABA Banking Journal - July 2010 - Investment Management (Page 40) ABA Banking Journal - July 2010 - Investment Management (Page 41) ABA Banking Journal - July 2010 - Surveys & Trends (Page 42) ABA Banking Journal - July 2010 - Surveys & Trends (Page 43) ABA Banking Journal - July 2010 - First Person (Page 44) ABA Banking Journal - July 2010 - First Person (Page Cover3) ABA Banking Journal - July 2010 - First Person (Page Cover4) http://www.nxtbook.com/nxtbooks/sb/ababj1014 http://www.nxtbook.com/nxtbooks/sb/ababj0914 http://www.nxtbook.com/nxtbooks/sb/ababj0814 http://www.nxtbook.com/nxtbooks/sb/ababj0714 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