At one time or another, nearly everyone has had to accept a “terms and conditions agreement” online by clicking a box. This is known as a “clickwrap” agreement; without clicking the box to consent, the transaction cannot proceed whether it is a software update for a phone, or a purchase online.
The payroll solutions company, ADP, uses clickwrap agreements on an internal company webpage that employees use to complete online forms. Annual bonuses are awarded in this way and employees who fill out a form to receive their bonuses must click to “accept” terms that also include a non-compete agreement. Recently, two employees claimed that they were unaware of the existence of the non-compete agreement when they accepted their bonuses. The two co-workers worked in sales at ADP for six years during which time they accepted incentive stock awards on five different occasions. Later, they both resigned their positions at ADP to work for a direct competitor, Ultimate Software, in the same sales territory for which they had worked for ADP.
ADP sued the former employees alleging that they were in violation of the non-compete agreement that they had consented to online. The ADP non-competition agreement prohibited employees from working for an ADP competitor or soliciting business from current or prospective clients for a period of 12 months after the end of employment. In the suit, ADP claimed the two former employers were soliciting both current and prospective clients of ADP. The company asked the court for a preliminary injunction to enforce the non-compete and the court partially agreed. The defendants were allowed to continue to work for Ultimate Software, but had to refrain from soliciting clients they had come to know through their work at ADP.
The defendants appealed, claiming that ADP’s internal website presented the agreement in a way that was faulty and left them uninformed of the fact that they were consenting to a non-compete clause. The non-compete agreement was never mentioned on the webpage, nor was it a requirement to open and read the documents before clicking acceptance. For those employees who took the time to read the terms and conditions, the non-compete agreement does not appear until page 19. However, on appeal the court affirmed the decision of the U.S. District Court for the District of New Jersey.
Non-competition agreements are designed to protect the business interests of the employer and usually take effect after the employer-employee relationship has ended. Clickwraps have been routinely upheld in court, but this is possibly the first instance of a non-compete agreement that was executed via clickwrap. Employees are encouraged to be aware of the contents of online agreements.
Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Provide Counsel on Employment Contracts and Frequently Litigate Employment Issues
Whether you are an employee or employer who needs counsel on the non-competition agreement in your employment contract, the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. have the experience to help you make the right choice. Furthermore, if you are involved in litigation or potential litigation concerning non-compete agreements, we are able to assist in these matters as well. Call us at 215-574-0600 or contact us online today to arrange a consultation in our Philadelphia offices.