You are asked to represent an individual who left her former employment for a position with a new employer while subject to an employment agreement containing post-separation restrictive covenants, including noncompetition provisions. The employee has been served with a complaint, along with a motion for temporary restraining order to prevent her from working for the duration of the suit. Upon your initial review of the employment contract you observe the following fee-shifting provision: “Employer is entitled to recover reasonable attorney fees and costs in any litigation brought to enforce the terms and conditions of this agreement.” In other words, your client is subject to a unilateral fee-shifting provision where the employer is entitled to fees in the event it prevails, but the employee may not recover fees for a successful defense. Surprisingly, in all but a small handful of states the law does not imply reciprocity in these types of provisions. Outside of those jurisdictions (assuming the provision is not ambiguous) courts across the country have found that one-way fee shifting agreements do not violate public policy and are enforceable.

The consequences of this provision can be significant. Even in cases where the employee has been on the job a matter of days, damages are minimal or nonexistent, and you believe the restrictive covenants are likely unenforceable, the threat of an award of attorney fees can be a game-changing disincentive to fight back. Your client may have solid defenses, but ones that will require substantial discovery and that will only increase the overall cost—and risk—of litigation. If unsuccessful, your client ultimately may be tagged with the fees and costs from both sides. This results in a highly imbalanced bargaining position at the outset of the case, and is made more acute in cases where your client’s new employer is not providing a defense. When the risk of loss does not just place your client’s job in jeopardy, but threatens personal financial ruin, the cost of litigating may be too great for your client regardless of the strength of their defenses.