08/18/2009

Recent Court Trends in Enforcement of Non-Compete Agreements

Recently, there has been a flurry of articles discussing how the recent downturn in the economy has affected the enforcement of non-compete agreements.  Generally, the current discussion among lawyers and other professionals is that the downturn in the economy is spurring a flurry of non-compete litigation.  Employers must be more competitive are more willing to litigate to enforce a non-compete agreement to retain its advantages in a competitive marketplace. 

An additional sentiment among commentators is that judges are becoming more sympathetic to employees because the economic climate has caused such a sharp rise in unemployment.  Because judges are provided the task of assessing whether a non-compete is reasonable under the circumstances in many states, sympathy for person who in many cases must support a family in a dwindling job market, is a compelling reason for judges to side with the employee.

Nevertheless, Traverse Legal litigation attorneys have found in its most two recent court cases concerning the enforcement of non-compete agreements, that judges remain willing to enforce reasonable non-compete agreements.  Recently, Traverse Legal litigated two cases on behalf of an employer in two separate Michigan counties where unemployment was approaching 20%.  Each court case involved an employee who left their employment for new employment in violation of their non-compete agreements.  Traverse Legal attorneys convinced the court in each instance that the non-compete warranted enforcement because the terms of the non-compete were reasonable and were designed to protect the employer’s legitimate business interests.  The two judges faced with making the determination of the validity and reasonableness of the non-compete agreements were presented with heartfelt pleas from two breadwinner employees with families, and in each case the courts enforced the non-compete agreements.

The lesson is that even in tough economic times and the resulting unemployment of employees, that in spite of much legal commentary trending leniency by the courts toward the employee concerning the non-enforcement of non-compete agreements, that judges are in fact willing to enforce a reasonable non-compete agreement that are drafted carefully to protect an employer’s legitimate business interests.

Employers must be careful not to provide the courts a convenient out by demanding too much from their non-compete agreements, and employees should look carefully at their non-compete agreements to determine whether an employer has overreached concerning non-compete restrictions. 

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