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Taser International v. Ward - Another Reason to Have Your Employees Sign Employment Contracts

Categories: Employment

Importance of an Employee Contract

Taser International v. Ward was decided by the Arizona Court of Appeals on May 13, 2010 and it demonstrates what can go wrong when high level employees are not subject to any contractual restrictions.

The decision states - when an executive was not bound by any employment contract or covenant not to compete, he was free to make reasonable preparations during his employment to compete with his employer.

The Court noted that the executive -

  • did not solicit or recruit any of the company employees, distributors, customers, or vendors;
  • did not buy, sell, or incorporate any business;
  • did not acquire office space or other general business services;
  • did not contact or enter into any agreements with suppliers or manufacturers for his proposed product; and
  • did not sell any products.

However the executive -

  • did begin developing a business plan,
  • did counsel with several attorneys regarding patent searches and
  • did explore product concepts and development.

While the Court did not limit competition to just actual sales of competing products, it did express the importance of separating preparation and plans from actual competition.

This new case provides a road map for drafting provisions into an employment contract that may prevent your high-level employees from leaving fully prepared to engage in a competing business. If you would like more information, please contact us. Jaburg Wilk attorneys have extensive experience in drafting and litigating employment contracts and we keep informed of the latest developments.


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