January 22, 2009
Employers routinely rely on restrictive covenants, including non-compete and non-solicitation agreements, as a primary means of protecting their investment in their employees, customers and confidential information. However, a recurring problem for employers who use such agreements is that courts around the country look with disfavor on such contractual restrictions and will refuse to enforce them if they are overbroad or not narrowly tailored to protect the employer’s legitimate business interest. The North Carolina Court of Appeals’ recent decision in Medical Staffing Network, Inc. v. Ridgway is a prime example of just such a case.
In light of the Medical Staffing decision and others like it in state courts around the county, any employer that uses non-competition or non-solicitation agreements as a means to protect their assets should review their agreements to make sure they are narrowly tailored and designed to protect legitimate business interests. Failing to do so may result in a finding that your agreement is unenforceable.
Factors to Consider When Reviewing Your Non-Compete Agreements
When reviewing a non-compete agreement to ensure that it is likely to be enforced by the courts and that it will protect a company’s business interests, companies should consider the following factors:
For assistance in analyzing new or existing non-compete or non-solicitation agreements for compliance with current law, please contact any member of the McGuireWoods Labor & Employment or Employee Benefits teams.