TOC Previous Next A+A-Print


Question 130: Must an employee abide by an agreement limiting postemployment activities?

I am employed by a family business—not my own family, I hasten to add. We act as intermediaries between European and Japanese suppliers and U.S. buyers, mainly smaller manufacturers and wholesale distributors, but also some large, independent retailers. I am vice-president in charge of the section handling home furnishings, decorating accessories, and fabrics. We do not buy and sell goods, but serve as agent; negotiate contracts, make shipping and delivery arrangements, and so on. Usually we are paid by the vendor, who includes our commission in the selling price; occasionally we serve as a buyer’s agent, and are paid for our time and expenses.

I went to work here right after graduating from college seventeen years ago. After eight years’ experience, I got my present position when the son who was being groomed for it broke with the family and went to work elsewhere. Now two of my staff and I are thinking about leaving and starting our own import brokerage, specializing in the sorts of goods our section handles. If we do, I expect that about a dozen other employees—most of the people in our section—will want to join us.

There are several reasons for leaving. Younger members of the family are coming into the business, and, while I am not worried about being let go, I have no prospect of advancement. Then too, when I became a vice-president, I asked the owners to base my pay on my section’s profitability. But they said no, and my pay has gone up less than half as fast as the section’s profit, much of which is due to business I personally brought in. Though I will earn over two hundred thousand dollars this year, the company gives few benefits and is strict with my expenses. Last year they did away with company cars, and I had to buy one for myself, since my wife and children need the family car. Meanwhile, family members draw high pay, write off exorbitant expenses, and take out all the profit rather than reinvesting to expand the business. Moreover, the owners always have been autocratic, and in recent years they have frequently overruled my business decisions.

The only problem with starting our own brokerage is a “Trade Secrets Agreement.” One Monday morning, about five years after I came to work here, the owners presented every employee with a document by that name, and told us that, if we did not sign by Wednesday, we would be given thirty days notice. Things were going well at the time, and I signed without much concern. Since then, all new employees have been required to sign the same document as a condition of employment. It includes this statement: “During my employment and for two years after its termination, I will not call on, solicit or take away, or attempt to call on, solicit or take away any of the clients of [the firm] with whom I become acquainted or of whom I learn during my employment, either on my own behalf or on behalf of any other person, firm or corporation.” The word clients is defined to include all parties to any transaction in which the brokerage has served or is serving as broker or agent.

Adhered to strictly, this agreement would keep me from doing business for two years with any of the suppliers and buyers who know and respect me. However, I have been told by a lawyer that though the agreement is legally valid, the family probably would not win a lawsuit to enforce it. Still, I want to do the right thing. Must I abide by the agreement?


This question concerns the moral obligation to keep a contractual promise. Various conditions can make breaking a promise morally acceptable, but none of those conditions seems to be fulfilled in this case. If there are grounds for thinking that keeping the promise would be unfairly burdensome, the questioner in evaluating them should exclude inappropriate feelings. The moral obligation to abide by a contractual agreement does not depend on its enforceability at law. However, precisely what was promised does depend on the meaning of the agreement’s wording, and a reasonable interpretation of that wording, which probably can be found in relevant case law, will clarify the obligation the questioner undertook in signing the agreement. He also should consider alternatives to either continuing in his present job or violating the agreement.

The reply could be along the following lines:

In signing the Trade Secrets Agreement, you made a promise to your employer in contractual form. Your main question is: Would it be morally wrong to break it? Fairness generally requires keeping promises, not least those in contractual form, but various things can justify or require breaking even such a promise (see LCL, 412–14). In your case, however, only two of them seem to me relevant—that the promise might have been made under duress and that keeping it might be unfairly burdensome, due to a great change in the conditions you reasonably anticipated when you made it.

Were you coerced into making the promise? Your employer did present you with a choice between signing and giving up your job. But, in my judgment, that did not constitute coercion. Very often, a contracting party’s alternative to making an agreement is repugnant, but that constitutes coercion only if the other party takes unfair advantage of the lack of a better alternative, and apparently your employers were not doing that. The commitment you were asked to make merely specified your general responsibilities to be a loyal employee and refrain from using your position to enrich yourself at your employer’s expense beyond your agreed compensation for your work. Moreover, you were not disinclined to sign; as you say, things were going well and you signed without much concern. Then too, you had two days to consider the matter, and had you chosen to give up your job, you would have had a month to look for another.

Are conditions now so different from those you reasonably anticipated back then that keeping the agreement would impose an unfair burden on you? Nothing you say indicates that. There has been a change, but it is in your relationship with the owners and your job satisfaction, not in other conditions that make keeping your promise more onerous.

You might argue that the owners have been treating you unfairly, that their unfairness requires you to give up your job, that your responsibilities require you to earn an amount available only if you start your own brokerage, that you cannot successfully do that if you abide by the agreement, and that you could not reasonably have anticipated this situation. That argument would be sound if its premises were true, but I very much doubt that the facts support them all. Perhaps the owners are greedy and disagreeable, but have they been treating you unfairly? If so, why have you not sought other employment during the twelve years since you signed the agreement? Any unfairness you are suffering may be tolerable—with an income over two hundred thousand dollars a year, you should be able to tolerate a good deal. But even if the situation becomes intolerable, you might be able to earn adequate income without starting your own brokerage, or else by doing so without breaking your promise. Moreover, and most important, it seems to me that, in signing the agreement, you almost certainly should have anticipated precisely the sort of situation you now confront.

Of course, there may be facts besides those you have mentioned that incline you to think changed conditions have made it unfairly burdensome to abide by your agreement. If so, you must apply the Golden Rule and conscientiously judge whether you, as owner of a similar business, would consider your employees dispensed from keeping a similar promise in a similar situation. In making that judgment, take care to exclude feelings that might bias it: resentment toward your employers, envy of their wealth, the sheer desire to increase your income (see CCC, 2535–40; LCL, 781–82).

The lawyer’s opinion, that the owners probably would not win a lawsuit to enforce the agreement, calls for two comments. First, even if the contract is not legally enforceable, you may have a moral duty to abide by it, since moral responsibilities pertaining to legal duties often extend beyond what could be legally enforced. Second, even successfully defending yourself against a legal action could cost so much time, energy, and money that your attempt to start your own brokerage would be hampered, perhaps fatally, with great damage to you and your associates.

However, good legal advice probably would help in a different way to clarify your moral responsibility. In signing the document, you promised no less, but also no more, than the words on the page signify. That language or language quite similar to it probably has been used in similar agreements that have been adjudicated. Since the document plainly was meant to create a legal obligation, you can reasonably take the law’s interpretation of the language as its real meaning. Thus, careful research in the relevant case law probably would determine precisely what you promised, and so indicate what you might do without breaking your promise.

That would be helpful. It would clarify the precise moral obligation you assumed in signing the agreement. It might reveal that you are mistaken in supposing the agreement bars you from doing business with the buyers and suppliers who know and respect you. For example, perhaps the agreement does not prevent you from sending a simple notice announcing your new brokerage and describing its services to many potential suppliers and buyers, including your present employer’s clients. The agreement also might allow you to maintain contacts and cultivate relationships with clients during the two-year period, so that when it was up you could immediately start doing business with them. Even if the agreement precludes such things, perhaps it would not bar you from doing business with clients who spontaneously approached you after learning from some third party, not your agent, that you had gone into business for yourself.

If starting your own brokerage while abiding by your contractual agreement seems hopeless, consider alternatives. You could try again to negotiate more satisfactory terms of employment with the family, or look for a more suitable position with some other employer for whom you could use your talents and experience without violating the agreement. You might be able to start an independent import brokerage specializing in products your present employer does not handle, and serving other suppliers and buyers.

Negotiating before a conflict occurs almost always is more consonant with love of neighbor than taking action likely to generate a conflict that will antagonize and burden both parties. So, if you decide to try to start your own brokerage, you probably should try first to obtain the family’s consent. For a share in your future profits or some other price, they might allow you and your associates to separate your division from their company. The prospects of that probably will be helped if well-researched legal advice makes it clear that the agreement you signed would be difficult to enforce, though it would be wrong to use that difficulty to obtain a new agreement that a fair-minded partner in the negotiation would not otherwise make with you.

Finally, God plainly has given you a great deal of talent, and you should be doing your best to use it well, not only to provide for your family but to serve others. If you do start your own brokerage, do not make maximizing profit the supreme end of the enterprise. Conduct your business as a form of lay apostolate, seek above all to bear witness to your Christian faith and hope, and put love into action (see AA 7–8, 16–17). Certainly you must seek a fair return for your work and on your investment, but you also should strive for efficient cooperation among all those involved in the business—employees, clients, and so on—and a fair share of benefits for each. Moreover, if you are the sole owner and chief manager, go beyond the requirements of justice to the extent that your responsibilities to others permit, and exercise Christian mercy. For example, you might offer your services to suppliers in third-world nations, even if their business would be less profitable than the business of first-world suppliers you are accustomed to dealing with.