NON-COMPETITION AGREEMENT ("NONCOMPETE")

A Non-Competition Agreement or “Noncompete” is a written contract whereby an employee essentially promises to limit future employment opportunities in consideration for ongoing employment with a current employer.  A Non-Solicitation Agreement is a similar agreement whereby an employee promises to restrict contacts with a business' clients following the separation of employment. 

From an employer’s perspective, a Noncompete is a valuable tool to protect their Client base, trade secrets, and other confidential business information. From the employee’s perspective, a Noncompete can represent a burdensome restraint on their ability to find new employment following a termination or separation.

A valid Noncompete or Non-Solicitation Agreement may be enforced in Court, resulting in monetary damages and an injunction prohibiting employment with a covered competitor.  However, enforcement is not always a simple task.  The employer bears the burden of showing that the restraint is reasonable and no greater than necessary to protect the employer's legitimate business interests.  The restraint may not be unduly harsh or oppressive in curtailing the employee's legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy.  Generally, Courts evaluate Noncompetes and Non-Solicitation Agreements according to the following criteria:

(1) Is the restraint, from the standpoint of the employer, reasonable in the sense that it is no greater than is necessary to protect the employer in sortie legitimate business interest?

(2) From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood?

(3) Is the restraint reasonable from the standpoint of a sound public policy?

Unfortunately, the actual application of these criteria can be somewhat complex. "Reasonableness" is evaluated in terms of the duration, geography and scope of the restraint.  If you have a Noncompete or Non-Solicitation Agreement and are concerned that your prospective employment may be in conflict with the terms of that agreement, you should consult immediately with an experienced employment attorney before commencing your new employment.

Prior Blog Entries:

Non Compete Update (December 2012)



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