On a weekly basis, we receive calls from employees and employers inquiring about the enforceability of non-competition agreements. Non-competition agreements can be enforceable, but only if narrowly tailored to protect the legitimate business interests of the employer, not unreasonably restrict the employee from earning a livelihood, and are reasonable from public policy standpoint.
Non-Competition Restrictions: For example, sometimes employers want to draft an agreement that prohibits their former employees from working for any competitor. That would be unenforceable because it prohibits the former employee from doing ANY work for such competitor, even something completely unrelated to what the employee did for employer and/or unrelated to core business of employer. It is broader than necessary to protect employer’s business and unfairly restricts employee’s ability to find job.
A valid non-competition provision should specifically (and narrowly) identify and define Competitor and the Scope of Work of the employee.
Non-Solicitation Restrictions: For some businesses, a non-compete agreement is not necessary or appropriate. However, they still have valid interests to protect and should have employees sign a Non-Solicitation restriction. A valid non-solicitation provision restricts the Scope of Work an employee can provide for current or prospective clients of employer. It makes sense that employers do not want former employees starting their own business, going to work for a competitor, or working directly for a client and, as such, taking business from employer. Protecting client relationships is a legitimate interest of employer. A strong non-solicitation provision is more likely to be enforced than a non-compete provision.
A few other points to remember. First, a non-compete agreement must be a legal binding agreement (it should not be in an employee handbook and needs to be supported by consideration). Second, a good agreement should also include other provisions such as: Non-Solicitation of Employees; Confidentiality; Intellectual Property Protection; Remedies/Injunctive Relief; and Non-Disparagement.
For more information and in-depth analysis, please review information on our website: https://www.generalcounsellaw.com/practice-areas/labor-and-employment-law/non-competition/
Merritt Green leads the employment practice at General Counsel, P.C., a law firm located in McLean, VA representing businesses, non-profit organizations, and individuals throughout the DC Metro area.