Eastern Carolina Internal Med., P.A. v. Faidas,
No. COA01-626 (N.C. Ct. App. May 7, 2002)
A
hospital sued a former employee for failure to make payments under the employment
contract's "cost sharing" provision, which allowed the hospital to
recoup payments from an employee who left the hospital and then became employed
by a competitor. The former employee argued that the provision was an unreasonable
restraint of trade, void against public policy, and an unenforceable penalty.
The Court of Appeals of North Carolina found that the contract did not prohibit
the former employee from engaging in the practice of her profession so, therefore,
it was not a covenant not to compete, which would be subject to strict scrutiny
as to reasonableness and public policy. The court also found that the liquidated
damages provision was precise and estimated a reasonable sum that was not a
penalty and therefore enforceable.