Previously, I gave some background on the lawsuit filed by 50 Eggs Restaurant Company against its former chef, Chef Bee. I also discussed a hurdle 50 Eggs will have to overcome, namely that Chef Bee never electronically signed the noncompete agreement. Now, let’s take a closer look at 50 Eggs’ employment agreement.
Attached to the complaint (linked below) is 50 Eggs’ Nondisclosure and Noninterference Agreement. This contains strict nondisclosure obligations that broadly describe the types of information that must be kept confidential. While this agreement does a good job giving general examples of confidential information, there are no restaurant-specific examples. Nondisclousre agreements should include categories of information that are important in the relevant industry. So here, 50 Eggs could have included, for example, proprietary recipes in the definition of confidential information.
The agreement also contains a two-year nonsolicitation clause. In the restaurant industry, it is important to keep a departing chef from bringing other employees with her. This is particularly true in the case of a celebrity chef, who may have significant sway over more junior chefs.
50 Eggs also had Chef Bee sign a “nondisparagement and brand protection” covenant. While this contains typical nondisparagement obligations, it also addresses the critical role social media plays in the restaurant business. This agreement prohibits the chef from directly or indirectly referring to the restaurant on any social media, unless authorized by 50 Eggs.
As social media has evolved, companies have used varying strategies to address employees’ social-media use. 50 Eggs takes a very restrictive approach. While this may prevent employees from saying negative or damaging things about the restaurant on twitter, etc., it also stifles social media “buzz.” When employees are enthusiastic about the restaurant, they are likely to share this enthusiasm on their personal social media accounts, which can be forwarded by their friends, and so on. By prohibiting social-media use, 50 Eggs is losing potentially valuable word of mouth.
The agreement also contains several riders, including the noncompete agreement. I’ll examine these in a future post.