Is your noncompete killing a fly with a sledgehammer?

AuthorHyman, Jon

At least half of my legal practice is serving as outside labor-and-employment counsel for small to midsize businesses. And, increasingly, much of that practice is consumed with drafting post-employment covenants, sending cease-and-desist letters to employees who are in violation of those covenants or filing lawsuits to enforce those covenants. Or, conversely, I often advise businesses whether they can hire employees with noncompete agreements or defend lawsuits seeking to enforce said covenants.

When a client calls me to draft a restrictive covenant agreement, I must work with that client to determine how wide of a net they need to cast (or how big of a hammer they have to swing).

A three-tiered approach

Knowing that most courts only enforce such agreements as necessary to protect an employer's legitimate interest, I need to determine the scope of the legitimate interest the employer is trying to protect (and is entitled to protect).

* Are they worried about a theft or disclosure of confidential information?

In that case, maybe a nondisclosure agreement is all they need.

* Are they worried about the employee poaching customers, employees or vendors? Then a nonsolicit pact is in order (plus the nondisclosure).

* Or is what the employee provides so unique that the business genuinely will be irreparably harmed by the employee jumping to a competitor? Then, and only then, is a broad noncompetition agreement called for (plus the nondisclosure and nonsolicit).

Tailor agreements narrowly

Employers, you need to use discretion and common sense. Narrowly tailor your restrictive...

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