Talking to Competing Lab Doesn’t Violate Marketing Manager’s Employment Contract

Case: In 2017, S&G lab hired a market manager at a base salary plus 35 percent of net profits generated by his accounts. But then came EKRA in 2018 and S&G felt compelled to redo the deal as a straight salary arrangement as a result of the new law’s ban on incentive-based compensation pegged to medical tests volume. But the manager was happy with his current contract and refused to renegotiate. Suspension and a unilateral pay cut didn’t change his mind. And when S&G learned that the manager had been talking to a competitor, it served him up a pink slip and summons to a lawsuit.

Significance: The Hawaii federal court tossed S&G’s case without a trial. There was no case for disclosure of trade secrets because there was no evidence that the manager revealed any confidential information about S&G while discussing employment opportunities with the competitor. While they did talk about how fast the lab turns around tests and the kinds of equipment it uses, S&G doesn’t treat that information as secrets and even features it on its website, the court explained. Nor did those discussions violate the manager’s non-compete because nothing he divulged gave the competing lab a competitive edge over S&G [S&G Labs Haw., LLC v. Graves, 2021 U.S. Dist. LEXIS 29248].