You Must Protect This House! – Non-Competes and More
Employers are struggling with not only finding quality employees but also protecting their interests when an employee leaves. I get a call or question at least once a week about the enforceability of non-compete/non-solicit/
What does it protect?
- Company trade secrets & confidential information
- Relationships with company clients, both existing and sometimes prospective
- Company-specific training and knowledge
What are the typical restrictions on the former employee?
- The former employee cannot go to a competitor company
- The former employee cannot start a competitor company that offers the same products or services
- The former employee cannot recruit former colleagues to join the competitor business
Is it enforceable (i.e, what do Courts look at)?
- Does it protect your legitimate business interest?
- Is the time restriction reasonable?
- Is the geographic restriction reasonable?
- Was the employee provided some type of consideration in exchange for the non-compete?
The above items are high-level points that should be considered when implementing non-compete/non-solicit/
Below are some good articles that can provide more insight:
- FTC Considers Restricting the Use of Noncompete Clauses by Companies – WSJ
- Employee Non-Compete Agreements Come Under Fire in New York | Inc.com
- Employees, Here Are 4 Things You Should Know About Non-Compete Agreements (forbes.com)
- 50 State Desktop Reference (seyfarth.com)
Like Under Armour famously says in its advertisements – “You Must Protect This House!”, non-competes/non-solicits/
Here are a few other things that may be of interest:
- Economic Review: Q2 2022 – Silvercrest (silvercrestgroup.com) (thanks to Sean O’Dowd for sharing)
- Webinar: An Economic Update in Turbulent Times (eisneramper.com) (June 24; 12-1pm)
- What are 4 Pillars of a Successful Franchise (eisneramper.com)
- SEC ESG proposal impacts on ESG integration funds (eisneramper.com)
- How US Oil and Gas Industry impacted by Russia and Ukraine War (eisneramper.com)
Helpful Resource Pages
- Knowledge Center (eisneramper.com)
- Trout CPA Blog | Tax & Business-Related Topics
- News & Analysis | Littler Mendelson P.C.
- Insights, Analysis & Perspectives for Your Business | RKL LLP (rklcpa.com)
- NFIB Research: Data and Trends Affecting Small Business Owners | NFIB
- The Tax Warrior Chronicles (taxwarriors.com)
As always, please don’t hesitate to email myself (firstname.lastname@example.org), Andy Miller (email@example.com), Christian Miller (firstname.lastname@example.org), Erik Spurlin (email@example.com) or anyone in our office with questions or comments.