Roberts’ Rules: What can Leslie Roberts teach us about conflicts of interest and restrictive covenants?
By Shaun Bernstein
The Toronto Star investigative reporting team has been keeping busy. First, they unearthed the drug scandals of former mayor Rob Ford. Next came the unleashing of the Jian Ghomeshi scandal, which was based largely on months of tracking the radio personality. The Star’s investigation has since led to Ghomeshi’s termination, several suspensions by his employers at the CBC, and most recently criminal charges (read more about that on our blog here).
Now their spotlight has shifted to Leslie Roberts, the affable anchor of Global TV’s popular morning and evening news programs. Last week, it was announced unexpectedly that Roberts’ has been placed on indefinite suspension, and the reason is even more shocking. The Toronto Star discovered Roberts is a part owner of the public relations firm Buzz PR, and that the firm’s clients have often appeared on his newscast. Following an internal investigation from Global, Roberts resigned yesterday from his employment with the broadcaster.
The immediate problems with this relationship are numerous. Roberts helped corporate clients with media training and publicity, and then subsequently had some of these clients on his television programs, without ever revealing his connection with Buzz PR to his viewers, or to his employer. As an executive editor of his newscasts on Global, Roberts directly helped control what went on air. Despite announcing his immediate resignation from Buzz PR, Roberts admitted to the Star in an interview, “I agree this doesn’t look very good.”
The specific terms of Roberts’ contract are not known, but his story raises some interesting questions in the world of employment law. What are an employer’s obligations when it comes to conflicts of interest? Conversely, what are an employee’s obligations to honour their employer’s interests? Must an employee remain exclusively tied to their employer during, and even after employment?
In many ways, the Roberts case calls to mind the importance of restrictive covenants. Restrictive covenants are elements of an employment agreement that establish the exclusivity of an employment relationship, and create limiting conditions for the employee both during and after the employment relationship with that employer. Standard employment agreements for example will feature a clause expressly limiting the employee from promoting or carrying on any other business without prior approval from the employer. They may also contain clauses prohibiting an employee from soliciting clients from their former employer, or operating or joining a competing business after leaving the company.
The reasons for these clauses are rooted in common sense. It would be virtually impossible for an employer to carry on business while their own employees are knowingly supporting their competition. Similarly, once employees leave their employer, restrictive covenants may ensure that outgoing employees refrain from sharing trade secrets with competitors, or become competitors themselves. These clauses are intended to protect a business, and ensure it stands a fighting chance in the open market.
The law surrounding restrictive covenants lays out some ground rules. Like any contract, both parties must agree to the clause in question in order for it to be valid. The crucial element to this is the timing of the agreement. A clause such as this should be part of the employment agreement signed before a new employee begins working for the employer. Otherwise, it becomes part of a new contract, and would then require the employer to provide valid consideration in exchange for the employee signing off.
The biggest question an employer or employee should ask with respect to any restrictive covenant is: ‘is it reasonable?’ The law states that such clauses must be reasonable, primarily in terms of their geography and scope. For example, a restrictive covenant could theoretically prohibit a former employee from working in a certain town for one year, but would not be reasonable if it restricted them from working in an entire province, or for a period of several years. The clause in question must also be clearly spelled out.
In 2009, the Supreme Court ruled in Shafron v KRG Insurance that a clause restricting a former employee from competing in the “Metropolitan City of Vancouver” (which is not a specific area) for three years was unenforceable. The Court emphasized that an ambiguous restrictive covenant will never be considered reasonable and made it clear that the courts would not step in to alter or correct a problematic restrictive covenants that are not drafted appropriately.
For Roberts’ part, his supporters claimed he did nothing wrong. His business partner at Buzz PR told reportersthat Roberts’ high level of integrity was unique. Yet Roberts’ greatest flaw may not have been what he did, but rather what he did not do. The Star article states Roberts only informed Global of his connections to the firm after being pressed by reporters, at which point Global issued their suspension.
From an employer’s perspective, Roberts’ greater sin was failing to inform Global of his connection to Buzz PR. While Roberts’ conflict may have been prohibited in his contract, it should definitely have been disclosed to Global as a matter of good faith. In a recent Supreme Court decision, a duty of good faith and fair dealing is now imposed in every contract, and the courts take that duty very seriously (Read more about the recent decision Bhasin v Hrynew and its potential implications on our blog here). Roberts’ integrity as an independent and impartial journalist is everything, and his failure to disclose his conflict jeopardized not only his own integrity, but also that of his employer. Now with Roberts’ resignation, his own journalistic credibility is forever mired in scandal.
For employers, a thorough and comprehensive exclusivity clause in an employment agreement will make sure that all competitive interests are protected in the employment relationship. An employee breaching a term of a contract is of course committing a serious violation, one for which the employer can take disciplinary action.
For their part, employees are protected in that restrictive covenants must be reasonable in order to be enforced. Employees will likely be expected to sign employment agreements barring them from working for others during their employment. However, an employer must also recognize that they are the bigger player in the employment relationship, and are limited in how they can restrict an employee’s actions after they move on. In Roberts’ case, his conduct appeared to be unreasonable. Most employees do not have much ‘creative control’ over the circumstances of their employment, but Roberts in his position did, and he took advantage of that control for his own independent business interests.
Employment agreements are complex and getting them right is essential. As employment law and HR experts, we are always happy to review your employment agreements. If you are looking for assistance drafting agreements for your new employees, or if you are an employee looking to learn more about what your contract really means, we can help. Contact our employment law or HR experts today for more information about our services.