Are “non-compete” agreements enforceable? That answer is “most likely”. Like most of agreements that attempt to restrain trade, courts are going to take a very narrow look at them to make sure that the restriction is truly necessary to fairly protect the interests of the company.
For example, if you hire an employee and have them sign an agreement that says, “when you leave, you can’t take the customers that you worked with, our prospective customers, our trade secrets, or our employees.” So long as the agreement is narrowly tailored to address those concerns, in most states, the courts are going to enforce it. Why? Because let’s face it – those are the things that have the most value to an organization and companies spend a tremendous amount of money to develop them.
Simply having an agreement that says your former employee can’t work for a competitor – without a stated and real need to protect the aforementioned items, is likely to lead to a court refusing to enforce the agreement. However, if you hire and compensate someone to develop these company assets, then the courts in most states are going to permit you to take reasonable steps to protect them. Of course, there are limits to the restrictions you can demand. And those tend to be fact specific. You should definitely consult an advisor before finalizing an employment agreement with restrictive covenants. Courts are definitely going to look for ways to protect the employee from an overreaching and unnecessary restriction.
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