Court Condones Use of “Garden Leave”
A physician separated from his medical practice and later sought a declaratory judgment that his noncompetition covenant was unenforceable. He argued the practice breached the contract by placing him on “garden leave” during the final 4 ½ months of the contract’s mandatory 6-month notice period. During a typical garden leave, the departing physician would get paid, but could not practice. The court ruled as a matter of first impression that the physician’s effort to repudiate his noncompetition obligation constituted an anticipatory breach of the physician’s obligation to pay liquidated damages as a result of going into prohibited competition with the practice following his departure. This decision is also being credited for its affirmation of the use of garden leave by an employer even in the absence of an explicit contractual provision authorizing the employer to utilize it.