A Restraint on Restraints?

The Federal Trades Commission (FTC) in the USA is considering banning non-compete clauses in employment contracts. Within workplace rehabilitation and injury management employment contracts, there is a similar clause, commonly known as a “restraint clause”

After a very personal experience initiated by a disputed employment contract and restraint clause, which ultimately led to lawyers tossing documents across a boardroom table, I have had a keen interest in the role which restraint clauses play in workplace rehabilitation and injury management. Though, after reading the recent news about the FTC considering banning non-compete clauses, my brain went into overdrive and I wanted to further explore the topic of restraint clauses, specifically as it pertains to professionals in the workplace rehabilitation and injury management space.

Like all workplace rehabilitation contractors and employees, I am required to sign service agreements and engagement/employment contracts. And, purely because one of my best friends happens to be a fancy pants contracts lawyer, I have always had someone to call and question about any of my contracts, to explain the legal jargon to me, and what it all means in my real-life situation. If you want her number, just send me a DM. Contracts are one of those things, like lawyers, and heck, even like rehab consultants - you don’t need them, until you do. They are legit legal documents, and when I was a younger, and less good-looking professional, I would just sign my name on the dotted line. Early in my career, I just thought contracts were part of the process, something that needed to be done, and to sign the contract was the price of admission to being employed.

So, here’s a question: Did you read your most recent employment contract? Be honest.

What I’ve come to know, from that one awful personal experience, is that I do indeed have a choice in reviewing, requesting amendments, and in ultimately signing these contracts. If a company’s intention is to protect their intellectual property and proprietary information, surely there are other laws such as copyright and intellectual property laws which protect them. And if their intention is to protect their customer’s from being solicited, then surely a non-solicitation clause could be appropriate. But, to out-rightly restrict someone from working in their chosen career, and in their chosen geographical area? Now, that seems a bit much.

The restraint clauses often found in employment contracts are designed to stop a person from working in their chosen profession. When the very definition of the word “restraint” is “a measure or condition that keeps someone or something under control” – well, that intention makes sense.

Some clauses which restrain a person from working in their very profession and also from working within a certain radius of the company’s offices are so ominous that a person would have to move to the other side of the world just to be 100% certain that they were complying with the clause.

Other clauses restrain professionals from working with customers, which at times is so broadly defined that it would exclude a rehabilitation consultant from working with say, a scheme agent, or regulatory body, because technically a customer is the person who pays your bills, and in the case of workplace rehabilitation, invoices are processed by a handful of claims service providers.

As a business owner, I understand the want to protect your company. I know the toll of starting and operating businesses, of selling one, and in another instance shutting the doors. I have literally bled, cried, and sweated throughout the process. So, the notion of someone you’ve employed using your intellectual property, taking your customer database, increasing their knowledge and skills under your tutelage, and then walking away and using all of that for their advantage, is simultaneously frightening and infuriating.

Hence, the restraint clause.

During my internal brainstorming session, and resulting scribbles on whiteboard #4, I mused about the major issues with the restraint clause in the workers compensation space.

The first issue is one to do with the rights of injured workers to choose. Just like they have a right to choose their medical team, injured workers have the right to choose their workplace rehabilitation provider. Here’s the technical bit, “An insurer may engage a workplace rehabilitation provider of their own choosing, or one nominated by the employer or worker”, though, because more often than not, a workplace rehabilitation provider is engaged by the insurer, there is a very specific SIRA Guidance stating that the insurer must provide the worker with “information that the worker has the right to request a change of provider”. This is not often the case, though, that’s for another article.

The question I’m left with is this one – “if a professional is working with an injured worker, then leaves the company, does the professional’s restraint supersede the rights of the worker to choose their own workplace rehabilitation provider?”

The second issue I saw is directly related to the professional’s capacity to progress in their career. If they are tied to a restraint clause, then they effectively restrained from accepting offers from other companies which could give them the opportunity for a higher salary, increase their skills, and to work in a company which could be a better fit for their stage in life. If people effectively forced into staying with their current employers, the talent pool becomes increasingly limited, adding yet another challenge to companies who are already struggling to fill vacancies.

Another thought, could these restraint clauses be one piece of the puzzle which contributes to workforce dis-engagement and attrition?

I don’t know.

Interestingly, the state of California, USA has deemed non-compete agreements in Californian employment contracts as being illegal and unenforceable. And, when I think about where is the centre of technological innovation, my mind goes straight to Silicon Valley. Are restraint clauses hampering innovation within the workplace rehabiltation industry? I mean, is there someone sitting at their desk right now who might have a new way of offering rehabilitation services, though is unable to implement their idea because of a restraint clause?

Our society has evolved away from the long-term employee model. Rarely now do we see people staying in one job for decades, and those who do are usually business owners, and higher-level management. Our industry is seeing more individuals going out on their own, either as contractors, or to start their own companies.

What do I think about restraint clauses? Get rid of them. I think competition, particularly in rehabilitation and compensation is healthy. Of course, I have my own biases. As a victim of a poorly interpreted restraint clause by a fairly prominent HR professional appointed by a previous employer, I was forced to engage in a lengthy and costly legal dispute, whilst simultaneously defending myself against an attempt to sabotage my career by certain parties, of which I do have evidence. Two of the consequences from that experience was the closure of one business at the start-up phase, and a major delay in launching a new business.

As always, let us end with optimism.

If your company fears a loss of customers when an employee leaves, then you must look to your own practices and not that of the departing employee.

There is plenty of work to go around, and workplace rehab providers have diversified their services into personal injury, NDIS, and into the private sector. It is human nature to change, adapt, and evolve, and with that comes innovation and progress for individuals, our industry, and our society.

As I see it, a company should be proud to have been a part of someone’s journey. If an employee leaves on good terms to pursue other opportunities, and then goes on to do good things, that is a testament to the people who helped them to get there.

My opinions are strong, and lightly held.

 Cheers for now, -Rhea  ✌️