How State Laws May Determine the Outcome of Your Non-Compete Dispute

How State Laws May Determine the Outcome of Your Non-Compete Dispute

You want to know whether your non-compete will prevent you from taking your next job.  The first question that needs to be answered is which state law applies to your non-compete agreement.  There as some states that do not enforce non-compete agreements in most case and other states that routinely enforce non-compete agreements.  Additionally, the state in which you are employed may not be the applicable state law to apply to determine the validity of your non-compete agreement.   Many non-compete agreements will contain an enforceable choice of law or jurisdiction agreement that may determine which state law applies to the non-compete agreement.

Because each state is free to develop its own law with regard to the enforceability of non-compete agreements the answer to which state law applies is critical to your understanding of your legal rights and obligations relative to your non-compete agreement.  In California, for instance, a non-compete agreement is generally not enforceable except in the limited circumstance of the sale of a business.  In Michigan, a non-compete is enforceable if it supports a legitimate business interest of the employer and is deemed reasonable in geographic scope and time duration.   Another important issue in deciding which state law may apply in states that enforce non-compete agreemetns is the concept of “blue penciling” or in other words whether the local court may reform the agreement to make it reasonable or, if found unreasonable, the Court may not blue pencil or reform the agreement and must simply invalidate it.

The first thing you or your attorney must determine is which state law applies to your non-compete agreement which is not always an easy thing to determine.   Traverse Legal is versed in the application of the law in all 50 states in determining the validity of a non-compete agreement and experienced in assisting you in determining which state’s law is applicable to your non-compete agreement.