Pleading Former Employer’s Breach Of Employment Contract: Affirmative Defense Or Counterclaim To Suit For Violating Non-Compete And Non-Solicitation Covenants?

Affirmative defenses and compulsory counterclaims.  In many instances, the consideration for an ex-employee’s non-compete and non-solicitation covenants was new or continued employment.  If the former employer then breaches the employment contract — for example, by failing to pay all of the compensation and benefits to which the ex-employee was entitled — but nevertheless sues the ex-employee in an effort to enforce the covenants, the ex-employee probably will plead “unclean hands” (that is, one who seeks equity must do equity) as an affirmative defense.  But here’s the rub: An ex-employee’s affirmative defense of unpaid compensation and benefits may derail the former employer’s covenant violation lawsuit, but the ex-employee may be held to have waived the right to collect the sums due her unless she also files a counterclaim.

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