Archive for the ‘Noncompete’ Category

Is Your Non-Compete an Independent Covenant?

Tuesday, August 19th, 2014

Often times a non-compete agreement will be incorporated into an employment agreement.  Sometimes, employees will allege a Business Hand Shakeresponse to a non-compete violation that the employer violated the employment agreement first and, therefore, excuse the non-compete provisions due to the employer’s breach of the employment contract, of which the non-compete agreement was a part.  The lesson for employers here is that if you incorporate your non-compete agreement into an employment agreement, make sure to utilize language that indicates that the non-compete agreement is separate and independent covenant from the employment agreement.  The better practice is to have the non-compete agreement as a separate and independent agreement from the employment agreement to ensure that an allegation by the employee does not jeopardize the non-compete agreement.

If you are an employee, analyze your non-compete agreement and the context of whether or not the employer may have breached their own obligations as part of the employment agreement if you are looking for a defense to a non-compete that is incorporated into your employment agreement.  Sometimes courts have determined that it will not issue a preliminary injunction and order the employee to not compete because there is an issue of fact concerning whether the employer breached its other obligations under an employment agreement that contained the non-compete agreement.

If you require assistance in drafting a valid non-compete agreement contact an experienced non-compete attorney at Traverse Legal.  If you are an employee who has questions concerning the validity of your non-compete agreement that is part of an employment agreement, contact an experienced non-compete attorney at Traverse Legal.

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Is your Non-Compete Contract or Clause Valid?

Wednesday, July 23rd, 2014

The New York Times recently ran a piece on the fact that non-compete clauses are increasingly popping up in employee contracts in a vast array of jobs.  The article was written on the context they current Massachusetts legislative debate whether or not to pass legislation that would invalidate non-compete agreements.  The article seems to complain that non-competes are turning up in jobs ranging from camp counselors to hair stylists and that it may be stifling competition and are generally unfair. Signing

In all of the states that currently accept non-competes, which are all states but California and North Dakota, there is typically a threshold question that needs to be answered and that is whether or not the non-compete serves a legitimate business interest of the employer.  We have been able to invalidate non-competes for clients where they serve no legitimate business interest of the employer in the context of different state laws.  Don’t assume that your non-compete is valid simply because you signed a non-compete agreement.  Non-compete agreements may be challenged on a number of different basis but the primary one and initial threshold for virtually all non-compete agreements is whether or not they serve a legitimate business interest.  In the case of many lower level employees that do not and are not exposed either confidential or proprietary information or have a close relationship to customers, it is often very difficult for an employer to establish it is protecting a legitimate business interest with its non-compete.

If you have a non-compete agreement and are interested in having it assessed concerning its validity, the experienced non-compete lawyers at Traverse Legal can provide you a review.  Don’t assume your non-compete is valid simply because you signed it.

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Is Your Non-Compete Valid?

Monday, December 23rd, 2013

Matt: Hi, it’s Matt Plessner, and welcome back to Non-Compete Law Radio. How do you know your non-compete is, for all intents and purposes, valid? To answer this question and of course, much more, we’re joined again today with attorney at law Mark Clark from the Traverse Legal office of Traverse City, MI. Mark, thanks for joining us.

Mark: Thank you, Matt. It’s my pleasure to be here.

Matt: Well, it’s a pleasure to have you. Now, let’s start out simply: what are some of the most basic ways to know if your non-compete is, indeed, valid, Mark?

Continue reading Is Your Non-Compete Valid? »

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Update for Michigan Non-Compete Law

Monday, October 14th, 2013
Matt:  Hi, and welcome back to Internet Law Radio. I’m Matt Plessner, and it’s time now for some updates on Michigan Non-Compete Law. And to help us out with this, we welcome back Mark Clark from the Traverse Legal office of Traverse City, MI. Mark, how are you?
Mark: I’m doing well, Matt. How are you today?
Matt: Doing very well. So Mark, what are some of the latest developments in Michigan Non-Compete Law?

Continue reading Update for Michigan Non-Compete Law »

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Enhance the value of your business with non-compete agreements

Monday, July 29th, 2013

Often we think that the value of a business is in its hard assets or intellectual property, and that in order to maintain the value in your business for purposes of either selling the business, or otherwise valuing the business in the marketplace, that you require agreements to protect those assets. One thing that employers often forget is that the value of the business is also in its employees. The best way to maintain value in a business for purposes of continuing or selling is to employ legitimate non-compete agreements to restrict movement of key employees to other employers. If you intend to sell your business or to take on investment or partners, those individuals or investors will want to be assured that key employees cannot simply walk away to the nearest competitors. Valid and reasonable non-competes can assist in preserving the value in your company by preserving its most valuable assets, which are its key employees. The lawyers at Traverse Legal can assist you in developing a non-compete that is reasonable and will assure you the best protections of having the non-compete invalidated by an arbitrator or judge in the event of a later dispute. Retaining key employees with the benefit of non-compete agreements will assist in preserving the value of your business.

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All or Nothing: Obtaining a Preliminary Injunction

Wednesday, July 24th, 2013

This post is useful for both employers and employees, and discusses what the legal standards are for obtaining a preliminary injunction in a non-compete case in Michigan, and generally throughout the remaining jurisdictions in the United States. A preliminary injunction is an injunction that the employer petitions the court for at the initial stages of the case to prevent the employee from violating the non-compete agreement. It usually requests that the employee cease working for a competitor during the pendency of the case.

A court must consider four factors in determining whether to issue a preliminary injunction: 1. harm to the public interest if the injunction issues; 2. whether the harm to the applicant for the preliminary injunction in the absence of the relief outweighs the harm to the opposing party if the relief is granted; 3. the likelihood that the applicant for the preliminary injunction will prevail on the merits; 4. a demonstration that the applicant will suffer from irreparable injury if the relief is not granted. These are general enough standards but oftentimes it boils down to the courts assessment of the relative strength of the employers non-compete under the specific circumstances of the case and the harm that the employer may suffer in the absence of the injunction. Both employers and employees must be cognizant of the standards in assessing the merits of their claims and defenses in the event of litigation over a non-compete agreement where a preliminary injunction is issued.

Oftentimes the case is won or lost on the issuance of the preliminary injunction on the outset of the case. Many times the employer who fails to obtain a preliminary injunction loses its incentive to litigate the case to its conclusion. In the event that the court issues the preliminary injunction an employee often loses his incentive to continue to defend the claims.

In assessing either your claim for a preliminary injunction or your defenses to a preliminary injunction it is important to consult with an experienced non-compete attorney. The experienced non-compete attorneys at Traverse Legal can provide you that assistance.

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Legislation Pending Regarding Non-Compete Agreements

Friday, July 19th, 2013

The governor of Connecticut recently vetoed an amendment to the Connecticut Non-Compete law that would have provided employees with a seven day review period prior to signing a non-compete in the event of a sale or merger of a company. Michigan has a proposed bill that would require employers to provide a non-compete prior to the commencement of employment. Why has there been an increase in proposed bills that would limit an employer’s ability to obtain a non-compete?

It seems that in this time, where unemployment is high and mobility in jobs is favored, the public sentiment, as well as court sentiment, is moving toward more employee freedom concerning job options. One of the risks in providing an employee a non-compete outside the bounds of your state’s restrictions can be the invalidation of the non-compete agreement. Finding a non-compete agreement on the internet, or simply borrowing one from another company will often not satisfy the legal requirements for a valid non-compete agreement.

When you need to draft a non-compete agreement that will withstand the legal requirements as well as judicial scrutiny, it is important to have a qualified non-compete lawyer draft your agreement. The attorneys at Traverse Legal are experienced non-compete lawyers, and can provide you with a valid non-compete that meets your state’s requirements. Contact an experienced non-compete attorney at Traverse Legal to discuss your proposed non-compete agreement.

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Employer Drafting Considerations in your Non-Compete

Friday, July 12th, 2013

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.

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How to Circumvent or Get Around Your Non-Compete Agreement

Tuesday, May 8th, 2012

If you are the employee and you have signed a non-compete agreement, the first question that you always have is how to get out of this non-compete agreement. We get calls all the time from employees who either signed a non-compete going into employment or were asked to sign a non-compete contract and confidentiality agreement during their employment. They sign those thinking, of course, that everything will go great for life and all of a sudden there is a downsizing or you get fired, or there’s a change in management, and you wonder what your options are going out the door.

Non-compete agreements typically are very broadly drafted, and so if you happen to be a person in the technology field and you’ve signed a non-compete agreement, many of those non-compete agreements are drafted so broadly that you couldn’t go work as a local web developer doing your own internal web design, for no customers. These things have to be limited to a legitimate business purpose. You, as the employee, typically have a much smaller budget for your lawyers to work with than the employer has. Negotiation is typically the approach that we use when we have an employee who wants to know, “How do I get out of this non-compete agreement. I’m either still employed or recently laid off. I’m looking at this other employment opportunity, and I don’t want to get their new employer in trouble. I don’t want to violate my non-compete.”

Continue reading How to Circumvent or Get Around Your Non-Compete Agreement »

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A Covenant Not To Compete in Michigan Can Be Enforceable

Tuesday, May 8th, 2012

Yes, non-compete clauses and non-compete agreements can be enforceable in court. Many, many years ago they were held to be unenforceable. The Michigan legislature stepped in and passed a statute as part of its anti-trust reform and changed the law. Michigan now is under a statute which says that non-compete agreements can be enforceable to the extent that they are reasonable, and that if the non-compete clauses in the agreement are too broad or are unreasonable, that a court may reform the contract to limit the non-compete and make it reasonable. Continue reading A Covenant Not To Compete in Michigan Can Be Enforceable »

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