In this Traverse Legal Radio interview, Attorney Mark G. Clark discusses non-compete agreements relative to the employee and the employer in terms of its set up, reasonableness as to scope and what to expect in the event of litigation if an issue may arise. Listen to or read the full transcript below:
Today’s non-compete law program is brought to you by the attorneys at Traverse Legal, PLC, a global law firm specializing in Internet law, Trademark infringement, Copyright Infringement, Cybersquatting, On-Line Defamation, Non-Compete & Trade Secret Law and Complex litigation. If you have a legal matter arising on the web, contact one of Traverse Legal’s internet lawyers today.
DAMIEN ALLEN: Good afternoon and welcome to Traverse Legal Radio. My name is Damien Allen here in studio A, and today we are on the phone with Mark Clark. Mark litigates non-compete agreements with Traverse Legal, and we’re here to find out more about non-compete agreements. Good afternoon Mark, welcome to the program.
DAMIEN ALLEN: What are some of the issues to consider when you’re doing a non-compete agreement? And what is a non-compete agreement?
MARK CLARK: Damien, a non-compete agreement is essentially a restrictive covenant imposed by an employer on an employee that prevents the employee from doing certain things generally in competition with the employer after they leave their employment, and in most states, courts have upheld these non-compete agreements. So they’re big deals to both employers and employees because obviously, if you’re an employee, for instance, you’re going to be restricted by a non-compete agreement potentially from engaging in the same type of work in the locale where you live and work currently, and of course, they’re important for the employer so that the employer can maintain their competitive business advantages in the market that they serve.
DAMIEN ALLEN: Now, are there other reasons why you’d want to have a non-compete agreement?
MARK CLARK: Well, the other reasons you might want to have a non-compete agreement if you’re an employer, for instance, is simply to maintain your client base if you serve a customer or client base and to protect potentially proprietary or confidential information.
DAMIEN ALLEN: Now what should employees and employers consider when they’re setting up a non-compete agreement?
MARK CLARK: In setting up a non-compete agreement, Damien, you want to make sure that it’s reasonable because courts are generally faced with the task of determining at the outset whether a non-compete agreement is reasonable in both scope, and that is geographic scope, and in duration. If a court finds a non-compete unreasonable, it could limit the non-compete or strike it down altogether, and so employers will want to make sure that their not overreaching in their non-compete agreements.
DAMIEN ALLEN: If a non-compete agreement goes into litigation, what are some of the issues that both parties would face?
MARK CLARK: There are many issues for consideration in litigating a non-compete agreement. Litigation of non-compete agreements is on the rise because of the challenging things that are facing our economy. Employers, for instance, are seeking to gain every competitive advantage that they have in the marketplace in order to survive, and of course, employees are facing layoffs and lots of turmoil in terms of their job placements, for instance. While employees are going to be restricted from moving around, employers are seeking to protect their legitimate business interests in demanding non-competes. Now if you are either an employee or an employer, some of the factors to consider in whether or not to go forward in enforcing a non-compete is the relative value of enforcing it in the first place. In other words, if you’re on the employer’s side, you’re going to want to make a fair assessment of whether or not spending a significant amount of money in a lawsuit is going to provide you value, even if you prevail. So that’s one consideration. You are going to want to look at the objective strengths and weaknesses of the non-compete in order to give yourself a fair assessment of whether you can prevail in non-compete litigation. And also, you are going to want to assess some reasonable goals if you initiate a lawsuit in the event that the parties engage in settlement discussions and wind up with a compromise. So those are the considerations – the primary considerations – in evaluating non-competes or non-compete litigation.
DAMIEN ALLEN: What are some of the other things to consider if you are going forward with litigation on this, or is there other things that you consider, are there other options?
MARK CLARK: Well, in assessing whether or not to move forward with litigation over a non-compete as an employer, you may want to consider something else that may have value and that is a threat letter in lieu of litigation or preceding litigation to attempt to gain compliance without the necessity of filing a non-compete lawsuit. If you’re on the employee’s side, you may want to consider evaluating the non-compete and then approaching the employer in advance of leaving. If you feel that you have very strong defenses relative to a non-compete or you have some legal or non-legal leverage that you are able to exert in resting yourself out of what might otherwise be a valid non-compete. Those are some options you can consider instead of engaging in non-compete litigation at the outset.
DAMIEN ALLEN: Definitely a large source of information. You can check out the continuing series of Traverse Legal Radio’s Programs on non-compete and other litigation matters. We’ve been speaking with Mark Clark. Thank you very much for joining us today, Mark.
MARK CLARK: Damien, it was pleasure being on your show and look forward to doing it again.
DAMIEN ALLEN: Thank you very much. And you’ve been listening to Traverse Legal Radio. Have a great afternoon, everybody.