Length of non compete contracts

jwhite4304 · October 2002

I am looking for opinions on the enforcability on non compete contracts in North Carolina and the length of the contracts. We require our new sales representatives to sign the contracts prior to employment and are wondering about the length of time. We are currently at 18 months and wondering if 12 months would make the contract more enforceable.
Thanks,

Lori B · October 2002

First, do you mean nonsolicitation of your customers or a blanket noncompete in the industry?

I can't speak for NC law but in general, nonsolicitation terms are much easier to enforce than noncompetes. We only utilize 12 months in our contracts that are used multi-state. Our contracts cover nonsolicitation and confidentiality. A blanket noncompete is only used if we are paying the person severance. (ie, we are paying you not to work for a competitor). We have found it difficult to enforce blanket noncompetes in other states if you aren't paying the severance for the same length of time.

Check with experienced counsel about the nature of your industry. These types of agreements vary not only by state, but also by industry in some areas. Good luck.

jwhite4304 · October 2002

>First, do you mean nonsolicitation of your customers or a blanket
>noncompete in the industry?
>
>I can't speak for NC law but in general, nonsolicitation terms are
>much easier to enforce than noncompetes. We only utilize 12 months in
>our contracts that are used multi-state. Our contracts cover
>nonsolicitation and confidentiality. A blanket noncompete is only
>used if we are paying the person severance. (ie, we are paying you
>not to work for a competitor). We have found it difficult to enforce
>blanket noncompetes in other states if you aren't paying the severance
>for the same length of time.
>
>Check with experienced counsel about the nature of your industry.
>These types of agreements vary not only by state, but also by industry
>in some areas. Good luck.
Solication of customers by sales representatives.
Thanks,
Jim

dmartenson · October 2002

Interestingly enough, my company just had to defend our non-compete. I am in Minnesota - and my company's noncompetes are for 12 months, starting on the date that the ee is no longer competing. This means that for a while he was competing, but then his company made his stop when our attorney called them. So, the 12 month period started on the day he stopped interfering with our clients.

In this case we had an ee go to work for a competitor (we do health and safety consulting) which the non-compete said he could not do. The ee then proceeded to solicit our clients (the same clients he was working with when he left our company). We sued the new company for interference of contract and the ee for soliciting our clients.

The new company released this ee from employment rather than go to trial. This was the first time we had to defend our contract - and it was gratifying to know that sometimes the system works.

We also have an 18 month "nonsolicitation" of current employees. We don't want someone breaking off the company, starting their own business in competition with us, and taking our staff with them.

My understanding is that if you don't make the noncompete too broad or too restrictive, they will usually hold up. We do not feel that 12 months is
unreasonable.

Length of non compete contracts

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