Employer Drafting Considerations in your Non-Compete

Employer Drafting Considerations in your Non-Compete

Oftentimes employers are tempted to utilize form non-competes that they find on the internet. However, the remedies available in the event of a dispute over a non-compete vary from state to state and necessarily impact the drafting considerations for a non-compete. Employers should carefully consider the available remedies in their jurisdiction in employing a non-compete agreement in your business.

For example, in some states courts are allowed to “blue pencil” a non-compete agreement. The ability to blue pencil means that the courts can simply strike provisions that they believe are invalid leaving the remaining portions of the non-compete in place. This is very important as the striking or eliminating of a non-compete provision but leaving others in place can actually work against the employer when it comes time for enforcement of your non-compete.

Courts in other jurisdictions have the opportunity to “red pencil” a non-compete that they find to be partially invalid. The ability to red pencil means that the court can simply strike the entire non-compete if any small portion of the non-compete is invalid. This has an obvious deleterious effect on the employer’s ability to enforce a non-compete agreement.

Finally, many states afford courts the opportunity to reform the agreement so that it is reasonable under the circumstances. This means that the courts will not enforce the agreement as written, but as the court views the reasonableness of the provisions presuming that the agreement is found to be unreasonable in terms of scope and duration of the non-compete restrictions.

Employers will want to carefully weigh the remedies as part of their consideration in drafting the non-compete, and to make certain that to the extent possible the scope and duration of the non-compete restrictions are reasonable up front. The risks concerning a finding that your non-compete provisions are invalid in part depend on the remedies available in your jurisdiction of enforcement.

The attorneys at Traverse Legal can assist you in tailoring a non-compete to minimize those risks that may be found either invalid or unreasonable and to advise you of those risks in the drafting of your non-compete agreement.