Medical Exam Company Agrees to Stop Forcing its Employees from Entering into Restrictive Covenants

New York State Attorney General Eric Schneiderman recently announced that Examination Management Services, Inc. (EMSI), a medical information and examination services firm, has agreed not to require its non-management employees in the state to enter into restrictive covenants, also known as non-compete agreements. This was reported in Newsday.

EMSI, which is based in Irving, Texas and has two offices on Long Island, had required its workers to sign a non-compete clause prior to joining the company, even if they did not have access to proprietary information. Under the terms, if an employee decided to leave the company, that employee would have to wait nine months before they could work for a rival company that was less than 50 miles away from EMSI’s location. This applied to “non-senior” workers who traveled to private residences to draw blood, conduct physicals and collect bodily samples for lab testing.

On July 12, Margaret Beebe, who worked as a traveling phlebotomist with EMSI, filed a complaint with the attorney general’s office when she learned a possible job offer with a clinical laboratory that would have paid her more money and require no travel was rescinded because she was still under the terms of the restrictive covenant she had with EMSI. Under the settlement, New York employees at EMSI would no longer have to sign non-compete agreements; this does not apply to directors, officers or other high-level executives.

This is not the first time such a settlement has been reached. Financial Times recently reported that, in June, Mr. Schneiderman announced a settlement with Jimmy John’s in which the sandwich chain would no longer require its workers to sign non-compete clauses.

The FT article cites federal data showing that almost 20% of U.S. workers are bound by these agreements, some of them still having to abide by them after leaving their jobs. Fourteen percent of those earning less than $40,000 are held to restrictive covenants. Despite its growing unpopularity among employees, 47 of 50 states still permit restrictive covenants.

If you are asked to sign an employment contract that contains a restrictive covenant, please contact an experienced employment law attorney first. Call Steven Mitchell Sack at (917) 371-8000.

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