Dec. 2011/Jan. 2012 / Features
Leveling the Playing Field with Non-Competes
The term “non-compete agreement” often is used to encompass several distinct restrictions on an employee’s post-employment actions. They fall into four categories: The pure non-compete restriction, which prohibits an individual from working in a competitive position; the “non-solicitation” restriction, which allows individuals to engage in any employment they want, but restricts them from soliciting a defined subset of the employer’s actual or prospective customers; the “no-raiding” restriction, which prohibits individuals from soliciting a defined subset of their co-workers; and the “non-disclosure” or “confidentiality” restriction, which requires individuals not to use, disclose, or otherwise jeopardize the confidentiality of closely held information.
A myth in this area of the law is that post-employment restrictions are not enforceable, so they are not worth the bother. When drafted properly not only are they enforceable, they are enforced.
More important, a properly drafted restriction enhances the credibility of an enforcement threat. Many individuals will make an effort to honor their contractual promises rather than risk litigation, and the practical realities of the enforcement process favor a well-drafted restriction. A company rarely seeks enforcement without giving notice, which often prompts negotiation. The lawyer for the former employee, and the lawyer for her or his new employer, will be more flexible and willing to compromise in meeting your demands if the threat of enforcement is real. Thus, through deliberate drafting in the beginning, you increase the likelihood that the substance of the restriction will be honored, without litigation.
