Recently, MSNBC anchor David Shuster was suspended indefinitely (and most likely, permanently) after he taped a pilot for competitor CNN in violation of his contract. As David Shuster’s suspension makes headlines, non-compete clauses in employment contracts for broadcasting employees, and particularly news anchors, may once again become the subject of controversy. Several states, including Arizona, Illinois, Maine, Massachusetts, and New York, restrict broadcasting employers’ use of non-compete clauses in their broadcasting contracts. California has taken a more extreme view of non-compete clauses, banning these types of clauses across the board with very limited exceptions.
New York, for example, enacted the Broadcast Employees Freedom to Work Act in 2008. The Act prohibits certain restrictions on broadcasting employees that had previously limited their employment options after leaving a company. The Act bans contract provisions akin to non-compete agreements that prohibit broadcasting employees from taking another job in a certain geographic area, with a competitor in the same industry, or within a particular period of time. However, this Act is significantly limited — a broadcasting employer may subject its employees to any of these restrictions during the term of the employment contract. In other words, the Act prohibits enforcement of these restrictions only after the term of the employment contract has expired or terminated.
California has taken a strict approach as to the validity of non-compete clauses in employment contracts in general, essentially prohibiting non-compete clauses with few exceptions. California Business and Professions Code section 16600 provides, “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” It is important for California employers to note, however, that they may still make efforts to protect their trade secrets, so long as they do not prevent fair competition.
Behind these laws that restrict or prohibit an employer’s use of non-compete clauses are competing interests — the interests of the broadcasting employees versus the interests of the broadcasting employers. On the one hand, non-compete clauses create substantial barriers that make it difficult for broadcasting employees to navigate their employment options subsequent to, and even prior to, the expiration of their contracts. In other words, a non-compete clause may restrict an anchor’s ability to meet and negotiate with other networks in anticipation of his or her contract’s expiration. A non-compete clause may also prevent an anchor from seeking employment with a competing network, in a specific region, or for a defined period of time after his or her contract expires.
On the other hand, broadcasting employers have a strong incentive to restrict their employees from seeking employment with competing networks. Arguably, these employers want to protect the significant investment they made in training and promoting a particular anchor or other broadcasting employee. Similarly, these employers want to prevent former anchors and other broadcasting employees from exposing the networks’ trade secrets, marketing efforts, and other highly sensitive subject matters.
All in all, broadcasting is an unpredictable and highly competitive industry. As a result, there exists a great tension between a broadcasting employer’s use of non-compete clauses and a broadcasting employee’s ability to freely move around the industry. In the years to come, perhaps more states will follow the lead of states like New York and California to end this tension in favor of employment mobility in the broadcasting industry.a