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Covenants Not to Compete

Posted by attorney John Phillips

One thing we are frequently asked to review is employment terms known as non-compete agreements. It essentially limits an employees ability to use his or her former employer’s training, contacts, resources and proprietary information in case he or she leaves employment. It is also designed to restrict competition against the employer and prevents information from being disclosed outside of the company.

Covenants not to compete are very common in almost every employment contract. They can be a very effective deterrent for employers to keep their advantage over competitors and employees going out on their own. However, depending on which state your business operates, this agreement may not be enforceable. In other words, your employee has agreed to these terms, but the contract cannot truly be enforced at law. California explicitly voids non-compete clauses and some other states also void these clauses. Law firms cannot institute non-compete agreements. However, most employees do not know this and court intervention is often required. Many lawyers advise employers to leave them in, as employees are not often aware of the law or fail to spend the money to challenge the contract.

Another requirement in states that allow these agreements is that it must be reasonable. Trying to enforce the agreement across the entire US would be unreasonable for a small business owner. However, you could possibly consider this reasonable for an internet company. Length of time is another factor. A permanent duration would almost always be stricken by a court. It must be limited to a reasonable time period. --- --- --- --- --- --- John M. Phillips Licensed in Florida, Georgia and Alabama --- --- --- --- --- ---

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