Film Friday- Employee Contracts May Not be Binding After All?

Thank God it’s Film Friday!! It has generally been presumed that an employee is bound by the term date set in his/her employment contract that he/she signs.

However, a recent lawsuit filed by 21st Century Fox against Netflix may change this entirely as the lawsuit concerns Netflix’s alleged poaching of Fox employees who were under contract with Fox for a set number of years.

Essentially, in the last several months some of Fox’s executives have opted to terminate their employment with Fox in order to work for Netflix. Netflix has been accused of inducing their newest additions to breach their contracts with Fox. Although, California labor laws are employee friendly, in the sense that non-compete agreements are not enforceable, this situation is novel. Rather than addressing what employees are allowed to do when they become unemployed, the situation here deals with employees leaving Fox while they were under contract. The impact of this lawsuit could be incredibly significant and may potentially affect employment contracts across all kinds of industries.

The crux of the case may hinge on whether or not California Business and Professions code Section 16600 allows employees to acquire new employment under an existing employment contract with a set term of years for employment. It is clear that Fox will be able to seek monetary damages, but their real concern is likely precluding their former employers from working for other entities in their industry. If Netflix were to win this suit it would forever change the dynamic of employment contracts in California, and possibly other states as well.

At this point, the facts of the case are still pretty murky. The nitty-gritty details of what exactly transpired in these hirings are unknown. For all we know these employees may have decided to leave for Netflix on their own volition, but if Fox is able to establish that Netflix did engage in improper conduct then we will get to the real juicy stuff. Stay tuned!

Credit: Mark Milshteyn

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