Covenants Not To Compete

By Bob Goldberg, RSPA General Counsel

I review a “Non-Compete” agreement or that I contact a former employee regarding his or her obligations under a non-compete. There are no uniform laws regulating non-compete agreements with variations in every state. In California employee non-competes are banned and unenforceable. Compounding uniformity is a struggling economy and the Court’s propensity to allow individuals to work rather than being unemployed. Non-competes for employees are inconsistently enforced, but when narrowly drafted and reasonable as to the time and area restricted can be upheld.

It is a good business practice in states where permitted to have all employees enter a non-compete agreement either at the beginning of their employment or when receiving an increase, promotion, or added benefit. But is it an equally appropriate practice to run to court when a former employee leaves for a competitor? Regardless of whether you go to court or not, employment non-competes have a significant deterrent effect on both employees and employers.