Set reasonable limits on noncompete agreements

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in Employment Law,Human Resources

Redd Pest Control tried to turn its financial fortunes around by setting a $7,500 per-month quota for each technician's route. Wayne Foster and Isadore Smith didn't even try to meet the mark. Within two weeks, they both quit and went to work for a competitor, taking more than 100 customers with them.

The problem: Both had signed two-year noncompete agreements. They tried to argue their way out by saying they were compelled to leave because the new quota was unreachable.

Although courts often cast a skeptical eye on overly restrictive noncompetes, a Mississippi state court upheld both of these agreements. Foster's and Smith's argument was bunk, the court said, because they didn't even try to meet the quotas and failed to look for jobs other than with the local competitor. (Redd Pest Control Co. Inc. v. Foster, No. 98-CA-00755-COA, CA Miss., 2000)

Advice: Courts rarely enforce noncompete agreements, mainly because of the way they're written: lacking consideration for the worker, being overly broad and having the potential to harm the public by, for example, reducing competition in an area.

The agreements in this case, however, were well written and reasonable, avoiding the common pitfalls. But the court was equally motivated by the fact that the former employees blatantly raided customers.

Bottom line: Noncompetes will be enforceable as long as there is no harm to the public and the agreement is reasonable as to duration, scope and geographic restriction. To win a noncompete case, you need to prove that harm was caused when the former employee broke the agreement.

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