Employers often obtain non-compete agreements or non-competition agreements from their employees. However, the employees are often in a position to successfully challenge the validity or reasonableness of the non-compete. Employers often ask, “How do I best obtain a valid non-compete agreement?” The best and most effective way to obtain a valid non-compete agreement by an employer from an employee is to do it with the offer of employment to the employee.
There is legislation pending and being debated in Michigan that would require employers to obtain a non-complete agreement from the employer and include it with the offer of employment, otherwise it would be invalid. Absent the passage of the legislation, the most effective way to obtain a valid non-compete is to still include it with an offer of employment. This does several things. It avoids the argument from the employee that the non-compete agreement was made without consideration because the employee will understand that it is a condition of the employment. It will remove the stigma of unfairness as the employee will no longer be able to argue that he or she did not know what they were getting into in executing the non-compete agreement. It will also go a long way towards an employee attempting to argue that the non-compete agreement is unreasonable in both scope and duration, which is otherwise a requirement for a valid a non-compete, because the employee executed the agreement at the same time he or she was offered employment, making the reasonableness argument much more difficult. Finally, it will take the away the sympathy factor from a judge who is often moved by the fate of the employee who indicates that “I was faced with signing the non-compete or losing my existing employment”.
What is the best way to obtain a non-compete agreement? The best way to obtain a valid non-compete agreement is to offer the non-compete agreement at the same time you make an offer of employment to the employee.