25 Hoosier Banker May 2015 the facts, the Court noted that liquidated damages provisions do not prevent an employer from enjoining a former employee’s conduct. Lessons for Financial Institution Employers The takeaway from these cases is that Indiana courts place the burden on employers to show that non-competition and non-solicitation agreements are enforceable. While courts are willing to recognize an employer’s goodwill with its customers and any business practices, non-competition and non-solicitation agreements need to be tailored individually to employees and to the specific job responsibilities. Moreover, liquidated damages provisions can be incorporated into agreements. t The Court found the non-compete provision was unenforceable, because it was overbroad in the scope of the activities it covered. On the non-solicitation provision, the Court found the plain language overbroad, lacked a time constraint and applied to prospective customers who never became DSI customers. Nightingale Home Healthcare, Inc. v. Carey Helmuth and Physiocare Home Healthcare, LLC.4 Carey Helmuth and Nightingale Home Healthcare Inc. (Nightingale) signed a limited non-competition and nondisclosure agreement (Agreement). Nightingale terminated Helmuth employment for “substandard work” and “violation of company policies.” Nightingale rehired Helmuth 10 days later, but did not have him sign a new agreement. Shortly after Helmuth’s second employment with Nightingale ended, he accepted employment with Physiocare Home Healthcare (Physiocare). The Court determined that when Nightingale terminated Helmuth’s 1 4 N.E.3d 772 (Ind. Ct.App. 2014) 2 No. 3:14-CV-312-RLM (N.D. Ind., March 31, 2014) 3 16 F.Supp.3d 964 (S.D. Ind. 2014) 4 15 N.E.3d 1080 (Ind. Ct.App. 2014) 5 17 N.E.3d 947 (Ind. Ct.App. 2014) initial employment, it triggered the two-year provision in the Agreement. As such, Helmuth had fulfilled the two-year provision in the Agreement and could work for Physiocare with no restrictions or conditions on his employment, and Nightingale’s noncompete was unenforceable. Pinnacle Healthcare, LLC, and Patrick J. Sheets, M.D., Inc., v. Patrick J. Sheets.5 Pinnacle Healthcare LLC (Pinnacle) purchased the health practice of Dr. Patrick J. Sheets in 2011. As part of the purchase, Sheets signed a two-year non-competition, non-solicitation, and non-disparagement agreement (Agreement). The Agreement also contained a liquidated damages clause, whereby Sheets paid Pinnacle a certain amount if he chose to practice medicine within an outlined 25-mile restricted territory. Two years later, Sheets left Pinnacle and set up a practice in the same building. The trial Court denied Pinnacle’s motion for a preliminary injunction, but the Court of Appeals disagreed and reversed. Examining TODD ANDRITSCH tandritsch@equiasalliance.com 11416 Forest Knoll Circle Fishers, IN 46037 Tel: 317.517.5000 www.equiasalliance.com Equias Alliance helps banks in Indiana, and across the country, meet their financial goals, manage benefit liabilities and enhance shareholder value with a custom designed BOLI program. Todd and the team at Equias Alliance want to be your source for strategic benefit and BOLI solutions. In Indiana, The Checkered Flag for BOLI is Todd Andritsch! The American Bankers Association (through its subsidiary, the Corporation for American Banking) has endorsed services provided by Equias Alliance. Todd Andritsch is a registered representative of and securities are offered through ProEquities, Inc., a Registered Broker/Dealer, and member FINRA and SIPC Equias Alliance LLC is independent of ProEquities, Inc. ©2015 Equias Alliance EA-Ad-03-2015-Indiana-HP-03ab.indd 1 3/6/15 2:00 PM
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