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How far can a coropration go with employee restrictive covenant agreements?

Columbia, MD |

Company is in the events and marketing trade show industry and wishes to protect its data and client list from departed employees

Attorney Answers 3

Posted

Different states treat restrictive covenants differently. Generally speaking, the restrictions should be related to the employer's legitimate business interest (for instance, to prohibit employees from revealing confidential, proprietary information and/or trade secrets of the employer after the termination of employment; to prohibit the former employee from competing with the employer and barring individuals from soliciting the clients or other employees of a former employer).

In terms of enforceability, the basic standard is "reasonableness" -- should be and reasonably limited in time, place and manner. What is reasonable largely depends on the type of work performed and the industry, as well as what the courts of the state where they are to be enforced have construed as reasonable.

Since you haven't said what restrictions the company is trying to impose, it's impossible to offer any opinion on whether they are reasonable or not.

Answers to questions are meant to be general only, are not intended to be legal advice and do not create an attorney-client relationship. Answers to questions are based on NY law, and the laws of other states may create different rights and obligations.

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Asker

Posted

Of course - I am particularly interested in geographic location with term, e.g. restricting any employ within the sector that is likely to be a competitive entity - a draft I have says US and globally where the corporation serves clients for two years.

Daniel Christopher Knauth

Daniel Christopher Knauth

Posted

In my experience, that sort of restriction -- a 2 year term, anywhere in the world, for anyone "likely to be a competitive entity"-- would probably not be considered reasonable. I'm not admitted in MD, but would be surprised if that broad a restriction would be enforced. For the most part, anything over a year is going to face a challenge (with 6 months or less being more of a "safe" number in terms of enforceability from an employer's perspective). The global reach might be okay, depending on the type of industry.

Asker

Posted

very useful, thank you

Howard Benjamin Hoffman

Howard Benjamin Hoffman

Posted

Daniel's answer is intuitively correct.

Posted

I generally agree with the prior answer, and add that under Maryland law, there must be a protectable interest for the restrictive covenant to be valid. If there is a protectable interest, you then can look at the geographic scope and duration of the covenant.

I practice in Maryland and can assist you with respect to this issue.

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Posted

Many thanks and I have your web details...

Posted

I agree with counsel from Rockville. That is, a court will only enforce such a provision concerning EMPLOYMENT if it is reasonable in both how long it lasts and how far it ranges. The idea is, if the provision results in your not being able to work at all it is too restrictive and will not be enforced, regardless whether you signed it.

You have a separate question about proprietary info, such as customer lists, recipes, methods and the like. For that there is a law passed by the legislature that says if the employer takes reasonable steps to protect that info--such as getting non-nondisclosure agreements--and you disclose anyway, you can be sued for damages and an injunction, regardless how far away or how far after you leave the company (or even before) that you disclose the info. You can even, in certain cases, go to federal prison. So do not give away this kind of info (or sell it).

Information here is general, does not create a lawyer-client relationship, nor a substitute for consulting with an experienced attorney on the specifics of your situation.

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Philip Leon Marcus

Philip Leon Marcus

Posted

PS, although located in Beaverton, OR, I am licensed in Maryland, where I lived some 45 years.

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