Surviving Challenges to your Non-Compete Agreement

December 29th, 2012

In Massachusetts, the validity and enforceability of non-compete agreements is a heavily litigated area of employment law. Non-compete agreements will generally be enforceable when they seek to protect legitimate business interests of the employer such as trade secrets, confidential information, or good will. A non-compete that seeks to prevent ordinary competition is not enforceable. In addition to protecting a legitimate business interest, the agreement generally must also be reasonable as to (a) the amount of time it seeks to be in effect, (b) the scope of what it covers, and (c) the geographic area it encompasses. Courts generally do not like to see that a non-compete agreement is over-reaching in any of these respects. It cannot, in effect, preventing an individual from earning a living.

There are also certain members of industries for whom non-compete agreements are illegal or will be found to be unenforceable. They are the following:
• Doctors
• Lawyers
• Psychiatrists
• Psychologists
• Nurses
• Social Workers
• Radio Broadcast on-air personalities
• Registered Brokers in a publicly traded company
The following are a few basic strategies for employers to help reduce the chances that an employee will challenge the validity of their noncompete agreement after they end their employment and increase the chances it will be upheld if it is challenged:

1. Be Specific

At the beginning of the employment relationship, discuss exactly what the employee’s obligations will be under the non-compete agreement should the relationship end and define any vague or ambiguous terms with the employee and/or his lawyer. When employees fully understand what is expected of them and they are in agreement at the beginning of the employment they are less likely to challenge the agreement’s validity at the end of the relationship. Additionally, should the employee challenge the legality of the non-compete, a specific agreement will more strongly support your position that the interests sought to be protected are legitimate and important as opposed to one that is vague and undefined.

2. Less May be More

Identify which legitimate business interests are truly the most important to your business and narrow the scope of your non-compete agreement to adequately protect just those key interests. Such an agreement will have a much better chance of surviving challenges to its enforceability because a court is less likely to view the agreement as overreaching and thus preventing the former employee from earning a living.

3. One size does not fit all.

Rather than having standard non-compete agreement for all employees, tailor your non-compete to the individual employee or to a class of employees. Execute them on a sliding scale with stricter and broader enforcement for high level executives with significant access to protectable company information to a very narrow, or even no, non-compete agreement for low-level employees with little or no access to confidential information.

-Peter Fisher

posted by: joelrosen in EMPLOYMENT & DISCRIMATION | No Comments

Leave a Reply