Rising podcast star, Greg Hamblin, hosted one of our partners, Jared Richards, on the latest episode of his podcast, On The Docket.
Thank you for all the wonderful feedback as well!
For today’s episode, I would like to call your attention to this article in the Las Vegas Sun describing the recent opinion from the Nevada Supreme court, Golden Road Motor Inn v. Islam (The last name of the employee litigating).
A quick summary: The Nevada Supreme Court held that non-compete provisions in employment contracts must be reasonable, or they are invalid.
What does this mean for you? If you are working in Nevada and signed a non-compete agreement, watch this short clip.
The segment begins just as Mr. Richards is describing the facts from Golden Road Motor Inn..
Jared Richards: The non-compete agreement was too broad. Traditionally, trial courts have the ability to take a non-compete agreement, and it’s called blue pencil, they can amend, if they find something that’s unreasonable because non-competes can’t be so unreasonable as to really bar somebody from gainful employment and I think this one barred her from working for any casino within 150 miles.
Greg: Oh, wow.
Jared Richards: That destroys her employment opportunities. 150 miles, that’s a long distance for somebody who I think was a janitor or a menial worker. Normally, a court would just simply say, “We are going to bar you from performing … We’re going to change the contract to bar you from performing this specific service that you were doing for your old employer and other employers,” so if you were a janitor there, you could still be a server, you could still be anything else.
But the Nevada Supreme Court moved away from the blue line principle and just simply said, “Guys, it’s in a valid contract, and that’s it,” which throws into question a huge number of contracts in the state of Nevada because so many people will take slightly over-broad, unreasonable positions with the hope and understanding that the trial court, if it’s found to be unreasonable is going to reduce it to the point of being reasonable.
Brian: Right, okay.
Jared Richards: Now, instead of reducing to the point of being reasonable-
Brian: They’re just tossing it out.
Jared Richards: They’re just tossing, which means, if you’ve put, and the restrictions generally are, they look at the type of work you’re doing and whether you could easily switch to another type of work. They look at the distance that you’re being restricted and they look at the time on which you’re being restricted. Now, a lot of employers are asking whether or not their contracts are valid at all.
Brian: Can I ask about casino hosts in Las Vegas in particular? Very competitive industry. The high end hotels – I used to work in casino – the hosts move in between hotels a lot.
Jared Richards: They don’t want their high rollers running with the hosts.
Brian: But any of these host contracts valid?
Jared Richards: Well, I don’t know. I mean, it would depend on the-
Brian: If they had one of these non-competes in them?
Jared Richards: No, it would depend. Now, I think that if you were to say, “You cannot work as a … If you come and work for us a host, you can’t work as a host, that very specific field, in the Las Vegas area, or within a 5 mile radius of our casino, or 10 mile radius of our casino” you might be able to get away with that, a court might look, for a year. A court might look at that and say, “Well, that’s reasonable.” The whole thing of 5 years or 150 miles, or just you’re not able to-
Brian: Or working at a casino.
Jared Richards: Right, or working for a competitor at all.
Jared Richards: Those things, now are extremely risky and if you have any of those in your contracts, your contracts may be invalid, or at least the non-compete provisions.
Brian: Right. Do you think that the casinos should rewrite the contracts or just hope that they don’t get sued.
Jared Richards: No. It’s not that they’ll get dues. It’s that they can’t enforce them. They’re never going to get sued for the non-compete. I won’t say never, but it’s when the casino tries to enforce the non-compete that everyone can just thumb their nose at the casino saying, “This is not a valid portion of your contract.”
If the casino really wants that protection, they need to now reconsider, they need to narrow the restriction and yeah, they’ll need people to re-sign.