Yellow-Dog Clause Law and Legal Definition
Yellow-dog clause is an agreement between an employer and an employee. In the agreement as a condition of employment the employee should agree not to be a member of a labor union. In the U.S. the yellow-dog clause was used to prevent employees forming unions. However, yellow-dog contracts were repealed under Norris-LaGuardia Act.
The term “yellow-dog clause” is now used under a different context. The clause can mean non-compete clause or can be appended to a non-disclosure agreement in an employment contract. The clause prevents an employee from working for other employers in the same industry. This clause is permitted only to prevent the possibility of an employee working for a competitor or starting a business, and gain competitive advantage by abusing confidential information about their former employer's operations, trade secrets, or secret informations including client list.
As the clause can be an abuse by employers, it is the duty of the employers to prove that the clause is instituted in an employment contract only based on the employer’s legitimate business interests. The employer should produce evidence that the clause is not unduly harsh or oppressive in restricting the employee’s ability to earn a living, and not against public policy.
