Macy’s Faces Legal Action Over ‘Unreasonable’ Non-compete Contract
A legal fight over Macy’s use of non-competes with higher-ups is brewing.
Kristen Cox, until recently a regional executive vice president of stores for Macy’s based in Chicago, urged a New York federal court late last week to find a non-compete she signed upon leaving the company in early April cannot be used to keep her from accepting a position with Burlington Stores.
In doing so, Cox took the retailer to task for requiring in 2012 that she sign the non-compete in order to receive a severance package upon leaving the company, characterizing it as an “unreasonable and unlawful” contract that “does not serve to protect any legitimate business interest of Macy’s.”
Non-competes are generally used to protect any trade secrets or goodwill that an employee may obtain from the company. While Cox claims she’s not been exposed to any relevant trade secrets, Macy’s has allegedly said it intends to enforce the non-compete if she goes to work for Burlington.
A Macy’s representative could not be reached for comment Thursday.
Cox pointed out in her complaint that Macy’s makes standard use of the non-compete with all employees above the level of general merchandise manager, “as well as with other lower-level employees management designates as eligible ‘for recruitment or retention purposes.’”
The contract states that it will not be enforced should an employee be terminated without cause.
“This provision demonstrates that the primary purpose of the non-compete — which purports to restrict any employment with practically any major retailer in the world for a period of two years — is to force employees to remain with Macy’s until Macy’s decides it is in Macy’s interest to terminate an employee,” Cox said.
She went on to argue the non-compete is “unreasonable and overbroad” because it’s attempting to restrict employment in a “vast and varied industry.”
“Burlington hired Ms. Cox because of her exceptional management skills and has no interest in anything ‘Macy’s-specific’ that she might have learned during her time working for Macy’s,” the complaint added.
As for why Cox decided to leave Macy’s, she cited “personal reasons” but also alluded to the retailer’s immediate plans to close 68 stores, along with another 30 over the next few years, and the expected elimination of roughly 4,000 jobs.
“In light of Macy’s financial trouble and announced layoffs, many Macy’s employees have concluded that they do not have a viable future at a company that is closing stores and constricting its operations due to changing consumer habits,” Cox said.
Cox’s new position with Burlington as senior vice president of stores for the Northeast has her salary set “significantly higher” than $75,000, leaving the amount in controversy enough for her complaint to continue at the federal level.
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