AETNA: Ceases ‘Non-Compete’ Mandates for Employees
Aetna U.S. Healthcare will no longer require its California employees to sign agreements which prevent them from working for competitors after leaving the company, the Los Angles Times reports. In a declaration Feb. 1, Aetna President Michael Cardillo "assured" Superior Court Judge Stuart Pollak that the "non-compete" contract requirement has been eliminated for Aetna's 4,000 California employees. Aetna, the nation's largest health insurer, changed the policy following lawsuits filed by several former employees. Non-compete contracts, which are illegal in California, are growing in popularity as "workers increasingly jump from one job to another, taking their training and knowledge with them." Employers, however, argue that because of trade secrets and the tight job market, they are forced to require the agreements to protect their employees "against raids from competitors." Propelling the issue is a recent decision from a U.S. District judge who ruled that Aetna "is liable for more damages" for firing a Riverside County woman who refused to sign a non-compete contract. Last year, the company paid a former employee nearly $1.2 million in damages after she refused to sign the agreement as a condition of "continued employment." The cases came to light in 1997 after Aetna fired about 100 employees who refused to sign the contracts -- which state that employees can not work for a rival firm for at least six months after leaving the company. Bobby Pena, a spokeperson for Aetna in San Francisco, said that the company discontinued the practice because it viewed California law regarding the issue as confusing. "We continue to believe we did nothing to violate California's public policy" regarding non-compete agreements, Pena said. Pollak has yet to rule whether Aetna violated unfair business practices laws. In a written statement, Pollak wrote that state law voids "every contract by which anyone is restrained from engaging in a lawful profession, trade or business." Cliff Palefsky, a San Francisco labor attorney, said, "It's a new form of indentured servitude where someone who no longer is your employer can prevent you from earning a living in your particular field" (Maharaj, 2/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.