Section 12 Requirement That Restriction Must Relate to Legitimate Proprietary Right of Employer

• Library: Employer-Employee Law 2008

To successfully enforce a restrictive employment covenant, the employer must have a legitimate proprietary interest to protect. Herrington v. Hall, 624 S.W.2d 148, 151 (Mo. App. W.D. 1981). The requirement is reaffirmed in Ballesteros v. Johnson, 812 S.W.2d 217, 223 (Mo. App. E.D. 1991). Penalizing employees for leaving the company is not a legitimate interest. Cape Mobile Home Mart, Inc. v. Mobley, 780 S.W.2d 116, 118 (Mo. App. E.D. 1989).

Section 431.202.1(3), RSMo Supp. 2007, provides that a covenant is enforceable if it seeks to protect either:

• “[c]onfidential or trade secret business information; or”
• “[c]ustomer or supplier relationships, goodwill or loyalty.”

1. (§17.13) Customer Contacts

Customer contacts are defined as “the influence an employee acquires over his employer’s customers through personal contact.” Schmersahl, Treloar & Co., P.C. v. McHugh, 28 S.W.3d 345, 349 (Mo. App. E.D. 2000); Healthcare Servs. of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604, 611 (Mo. banc 2006). Courts that are evaluating whether a covenant is reasonable as it relates to customer contacts look to the quality, frequency, and duration of an employee’s exposure to the customers. Washington County Mem’l Hosp. v. Sidebottom, 7 S.W.3d 542, 545 (Mo. App. E.D. 1999).

Missouri courts have historically held that an employer has a proprietary right to its customer accounts and their goodwill. Mills v. Murray, 472 S.W.2d 6, 12 (Mo. App. W.D. 1971); Cont’l Research Corp. v. Scholz, 595 S.W.2d 396, 400, 401 (Mo. App. E.D. 1980). If the employer has customers who regularly patronize its business, there is a stock of customers protectable by a noncompetition agreement. Silvers, Asher, Sher & McLaren, M.D.s Neurology, P.C. v. Batchu, 16 S.W.3d 340, 345 (Mo. App. W.D. 2000). A “customer”...