Q. My company requires new employees to sign a two-year noncompete agreement. Are such agreements enforceable?
A. Maybe. Laws regarding noncompetition agreements differ from state to state, so the answer to your question may be different depending upon where the employees are located, and which state’s law applies.
In Minnesota, courts will enforce noncompete agreements when necessary to protect legitimate business interests—such as preventing disclosure of trade secrets or protecting a company’s customer relationships. Courts will try to balance those business interests with an employee’s right to earn a living in his or her field, and the public’s interest in business competition.
In balancing those interests, courts assess the reasonableness of both the time restriction and geographic scope of the noncompete. With regard to time restrictions, courts may consider the amount of time needed to obliterate the connection between the employer and the former employee in the minds of the customers. They may consider the length of time needed for the employee’s replacement to learn the business and begin establishing relationships with the customers.
Although two-year agreements have been upheld in the past, one-year restrictions are far more common in Minnesota. For a court to be inclined to enforce a noncompete for a longer period of time, one would expect there to be either a very narrow geographic limitation or unique circumstance involving the customer relationships and other business interests.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/8832/how-do-courts-approach-enforcement-of-noncompete-agreements "
- UAW, Caterpillar workers sue for the right to smoke
- Check bankruptcy cases when sued—you just might win a quick dismissal
- Phrase job offers carefully to avoid confusion, disputes
- N.Y. court refuses to apply Ledbetter Act to pay disparities because of missed promotions
- What managers need to know about hiring