What Can Employers Learn From Conan O’Brien and NBC?

Just a few days ago, NBC announced that it was moving the Jay Leno Show from its current 10 p.m. starting time to 11:35 p.m. This move was prompted by complaints from NBC affiliate stations that the Show’s poor performance was damaging the ratings of their local news programs and their profits. The move of Leno’s show, however, will require moving the start of the Tonight Show to 12:05 a.m. Yesterday, Conan O’Brien released a statement objecting to the changes and threatened to leave the show. What can employers learn from this high profile, high-stakes predicament?

Conan and Leno are employees of NBC and their rights and obligations are governed by employment agreements. As a result, the options of all three parties will be determined by the terms of these agreements.

Conan’s threat to bolt from NBC is likely based on a basic tenet of contract law: a party to a contract is relieved of the duty to perform (no pun intended) if the other party to the contract materially breached the contract first. While I have not seen the terms of Conan’s agreement with NBC, the final resolution of this highly public squabble may well turn on whether NBC’s actions are in breach of its agreement with Conan.

But how does the Conan-NBC contract apply in the real world? Well, Conan’s agreement with NBC, like many employment agreements, probably contains express restrictions on Conan’s ability to jump to another employer. Indeed, rumors are flying that Fox may be interested in bringing his talents to that network. If Conan can show that NBC actions materially breached his contract, he could be relieved his contractual obligation to provide a show for NBC and any restrictions preventing him from jumping to another network.

As a result, an employer should always make sure that any material changes affecting a key employee are in compliance with the terms of any employment agreement with that employee. If not, a court may refuse to enforce any non-competition provisions contained in the agreement.

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