GARDEN-LEAVE EMPLOYMENT CONTRACTS
What are Garden-Leave employment agreements? They are agreements which pay the terminated or departed employee for not competing with his/her old employer.
Want an example? In Bannister v. Bemis Co., Inc., (2009 U.S. App. LEXIS 3648, 8th Cir. Feb. 25, 2009) a Garden-Leave clause was examined by a federal court in Arkansas. Bannister served as director of product development for Bemis. He signed a non-compete agreement which contained an 18-month post-employment restriction against working for a competing business. However, Bannister’s contract provided he could receive his base-salary from Bemis if he was “unable to obtain employment consistent with his abilities and education solely because of the non-compete clause.” This is called a “Garden-Leave” provision.
Bannister requested, several years later, a release from his non-compete clause so he could join Mondi, a Bemis competitor. The request was refused by Bemis. Bannister then sought his Garden-Leave pay from Bemis, claiming he could not find a suitable position because of his non-compete. He provided monthly statements to Bemis regarding his efforts to find work. There were other issues in the case but Bannister won on his argument and the court awarded damages in the amount of 9 months of salary for the time Bannister was unable to find comparable work.
My Take: If you bring highly sought after skills to you job and the employer wants you to sign a restrictive non-compete agreement, request a Garden-Leave provision in your employment agreement.