Restrictive covenants (non-compete agreements)

We have represented both sides in conflicts concerning non-compete agreements; that is, former employers who are trying to enforce such agreements, and former employees who are trying to break free of the restrictions to employment these agreements provide.  In addition, we have represented both buyers and sellers of businesses where the contract of sale included restrictive covenants.

A covenant not to compete is usually contained in an employee’s employment agreement, and describes what the employee can and cannot do once he/she leaves the job or is terminated.  Whether or not a restrictive covenant is enforceable depends on many factors.  These include:

• The covenant must be designed to protect the “legitimate business interest” of the employer.  Protecting the time and money invested in building the business is a “legitimate” interest.  Therefore, the employee ordinarily may not take his/her employer’s customer lists and trade secrets to start a competing business. 
• The covenant must be “reasonable” - both geographically and time-wise.  That is, a covenant which would restrict a former employee from ever starting a competing business would likely not be enforceable.  Similarly, a covenant which said the former employee could not start a competing business anywhere in the state would probably not be enforceable.  A covenant which said the former employee could not start a competing business for two years and anywhere within 10 miles of his/her former employer is a covenant that a court would likely find reasonable and enforceable.

Interests of the public - a court will look at a restrictive covenant to see if it will impose a hardship on the community if it is enforced.  For example, if the former employee provides specific medical services, the court will look and see if a restrictive covenant would leave a community without those particular services or with a critical shortage of those services.

If you are an employer who wants to draft or enforce a restrictive covenant, call us.

If you are an employee who wants to know whether or not to sign a restrictive covenant, or whether an already-signed restrictive covenant is enforceable, call us at 1-888-472-5865.

Call us if you would like to speak to an experienced employment attorney.

An AV rating is the highest available, meaning that the lawyer is
recognized by her peers as having achieved preeminent legal
ability and very high ethical conduct. Only about 20% of all
lawyers who have been rated have achieved an AV rating.

A Woman-Owned Law Firm