Enforcement of Restrictive Covenants / Non-Compete Agreements
The use of restrictive covenants such as non-compete agreements and non-solicitation agreements by employers has grown tremendously. These restrictive covenants are not limited only to top executives, but may be used at all levels of a business. When a dispute arises regarding a non-compete agreement, the most important issue is whether the non-compete is actually enforceable by a court with proper jurisdiction. Generally speaking, the factors that are weighed in determining whether a non-compete will be found to be enforceable are:
- Employment Restrictions – Are the employment restrictions within the non-compete restricting an employee from working for current competitors or do they also include restrictions on working for companies or performing jobs that are not linked to competitors?
- Duration of the Non-Compete Agreement – Is the duration of the non-compete for a period greater than that needed by the employer to adjust to the loss of the employee? Or is the duration considered a reasonable period in order to protect the employer’s short-term business interests?
- Unreasonable Restrictions – Are there clauses within the non-compete that call for restrictions that are unrelated to the protection of the company attempting to enforce the non-compete? For instance, a restriction on a former employee’s right to be a passive investor of a competitors company may be deemed an unreasonable restriction.
- Geographical Limitations – The question of whether the geographical area being restricted by the non-compete is too broad will always be analyzed in weighing whether the non-compete is enforceable. Another relevant variable in the analysis of geographical limitations is whether an employee will be able to find work near his or her home if the non-compete is deemed enforceable.
Creating a robust and enforceable non-compete agreement can be complicated. At Oppenheim Law, we will simplify the process for you so that you can focus on your business.