Inside: Cultivating a valid “garden leave” clause

Unless carefully crafted, garden leave clauses can leave an employer without realistic enforcement options

Over the last decade, the so-called “garden leave” clause has begun to appear with increasing frequency in employment agreements in this country. Long seen and generally accepted in Europe, the clause, in its pure form, has met significant enforcement challenges here.

A garden leave provision is one in which the employee is required to give a certain period of notice prior to terminating employment. The garden leave clause provides the employer the right to change the employee’s duties or effectively suspend the employee for the balance of the notice period. During the notice or garden leave period, the employee remains an employee, subject to the direction and control of the employer and receiving at least base salary compensation. The commonly articulated rationale of employers seeking enforcement of the clause is that placing the employee in the garden before joining a competitor serves to protect the employer’s trade secrets and good will with clients and provides an opportunity to implement a seamless transition of employee responsibilities free from interference from the departing employee. In some industries, the clause was attractive to employers as it, at first blush, appeared less onerous than a non-compete provision, while at the same time providing the possibility of very similar protection to the employer.

Contributing Author

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Lawrence F. Carnevale

Larry Carnevale is a partner at Carter Ledyard & Milburn LLP. Mr. Carnevale is the chair of the firm’s Litigation Department and Trade Secrets, Business...

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Contributing Author

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Judith A. Lockhart

Judith Lockhart is the managing partner at Carter Ledyard & Milburn LLP. She is the chair of the firm’s Employment Law Practice Group and a...

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