Non-Compete AGreements

SSD

According to Maryland state law, what's the allowable time frame where a company has to enforce a non-compete agreement? We actually lost a case tied to our non-compete a year ago and there may be a similar instance on the rise. This is currently stated in our agreement:

Covenant Not To Compete

Employee agrees that he or she will not, during the course of employment or for a period of twenty four (24) months commencing upon the expiration of employment, voluntarily or involuntarily, directly or indirectly,
anywhere in the United States be an employee, agent, consultant, owner, stockholder,
partner, officer, director, to any business in competition with Employer.

Any feedback would be greatly appreciated.

nietra

WOW! I'm sorry but when I read this I thought that is really strict! They can't work for a competitor anywhere in the US for 2 years?! It seems that a court would not uphold this agreement becuase it's taking away the employees chance to earn a living but that is just my opinion.

Since we don't use them I had to go back to my textbooks and found this: "Of course a court of law may or may not uphold the agreement. When seeking to enforce these covenants, the employer must prove to the court that the agreement is reasonably intended for the protection of a legitimate business interest of the company. Examples are trade secrets, valuable confidential business information, substantial relationships with specific existing or prospective customers, customer goodwill associated with an ongoing business, a specific geographic location, or a specific marketing or trade area, and extraordinary or specialized training."

What type of work is this employee doing?

SSD

We're a speciality finance company (a very small industry) where our competitor is literally across the street so trade secrets, competitive information is our biggest concern...

nietra

Since this is the second non-compete case that you may lose I would consider contacting an employment law attorney to have an agreement created that would be enforceable in Maryland.

I'm thinking that if you put a radius and/or a time frame that is smaller you may have a chance at having a legally binding agreement.

Parabeagle

In Oregon, your noncompete would probably be viewed as overly restrictive, and a court will not permit enforcement of an agreement that essentially prevents an employee from earning a living in his/her usual occupation.

hhaynal

Try this approach:

Have all your employees sign non-disclosure agreements. Together with a less restrictive non-compete, the employee would not be permitted to work in the job duties/responsibilities of current position with prospective competitor employer.

We deal with this on a regular basis in that applicants subject to former employer non-compete and we'll call and discuss whether the job we are hiring the individual for would breach the non-compete. We also get calls from employers regarding our former employees.

Rockie

Since these agreement are so state specific, you would be wise to consult your labor attorney rather than trying to draft these yourself.

What you have presented would more than likely be considered "overly restrictive" in a court of law. Usually, what happens is that you are required to have a mileage restriction, such as a "50 mile radius" of your employment or specific type positions that this person would be restricted from pursuing. You cannot restrict them for pursuing employment period.