The employment attorneys at Nardone Limited in Columbus, Ohio want to ensure our clients execute the proper employment agreements so their business interests are protected. Specifically, we want to protect our clients from unfair competition. As part of owning and managing a successful business, most owners will likely go through the process of hiring new employees. One important aspect of the hiring process is the employment agreement and the non-compete provision within that agreement.
Including a valid and enforceable non-compete provision within the employment agreement is very important as there are many employees who may try to breach the non-compete provision upon termination of employment. The employee will argue that the non-compete provision is unenforceable for a number of reasons. Many attorneys who represent employees provide recommendations on how an employee can challenge a non-compete provision. Listed below are the most common arguments an employee can make to challenge the enforceability of a non-compete provision. Also included are Nardone Limited’s recommendations on what the employer can do to prohibit the employee from making these arguments.
Common Arguments by Employees Challenging a Non-Compete Provision
- The Non-Compete Provision Is Overly Broad and Unreasonable.
The employee can make the argument that the terms of the non-compete provision are unreasonable and overly broad, rendering the non-compete provision unenforceable. For example, the employee can challenge the geographic limitation or time limitation of the non-compete provision. Thus, the employer should make sure that the geographic and time limitations contained in the non-compete provision are reasonable for that specific position and for that geographic area. There are certain strategies that an employer can use to implement when and how a non-compete provision is enforced. Those strategies will vary based on the facts and circumstances of each employment agreement.
- The Business Breached the Employment Agreement.
The employee can challenge the non-compete provision by showing that the employer did not abide by the terms of the employment agreement, thus breaching the contract including the non-compete provision. To ensure this does not happen, the employment agreement should contain a provision that states any breach or waiver of any provision or term of the employment contract does not make the other provisions or terms unenforceable. Therefore, even if the employer breaches a section of the employment contract, the non-compete provision is still enforceable. The employer should also document all substantive discussions with the employee during the employment relationship, which includes documenting all performance reviews and write-ups. Documenting all communication with the employee during the employment relationship makes it difficult for the employee to argue that the employer breached the employment agreement.
- The Employee’s New Position Does Not Violate the Non-Compete Provision.
The employee may attempt to demonstrate that the employee’s new position does not violate the terms of the non-compete provision. But, if the employee is moving into the same or similar position, it is unlikely that the new position does not violate the terms of the non-compete provision. Thus, the non-compete provision with the employee should detail and define the types of positions, duties, functions, and job responsibilities that are prohibited by the non-compete provision. This will confirm that the employee is aware of what specific job positions and functions are prohibited by the terms of the non-compete provision, leaving less of a grey area for the enforceability of the non-compete provision’s terms. To ensure the enforceability of a non-compete provision, an attorney who is intimately familiar with the business and the industry should draft the provision.
- The Employee Did Not Have Access to Proprietary Information.
If the employee did not have access to trade secrets or proprietary information in their position, the employee may make the argument that the non-compete is unenforceable because there is not a legitimate interest to protect. One way an employer can respond to this challenge is to argue that the employee’s skills and training, which were learned through their employment with the employer, make the employee competitive to the employer upon termination. If the employee signed a non-compete provision that limits the employee from accepting a new position within a certain geographic area and for a specific time period after termination, the non-compete provision should be enforceable, regardless of whether the employee had access to trade secrets or proprietary information. Depending on the facts and circumstances of the employment agreement, an employer may have other arguments in response to this challenge.
- The Business Terminated the Employee Without Cause.
An employee can argue that they were terminated without cause, and therefore the non-compete provision is null and void. One way an employer can avoid this argument is to include language within the non-compete provision stating that the non-compete provision is enforceable, regardless of whether the employee is terminated with or without cause. Again, the employer may have other arguments against this challenge, however, the specific arguments will depend on the facts and circumstances of that particular employee.
Overall, to ensure that a non-compete provision is enforceable, the employer should discuss the non-compete provision with the employee. The non-compete provision should also be clear and detailed as to what specific job positions and functions are prohibited. The employer should also make sure that the non-compete provision is unambiguous and not overly broad as to the time and geographic limitations. The easiest way for a court to strike down a non-compete provision is when the provision is overbroad, imposes undue hardship on the employee, and is greater than necessary to protect the employer from unfair competition.
Contact Nardone Limited
If you have any concerns about employment or business matters, specifically regarding non-compete provisions, the experienced attorneys at Nardone Limited will assist you and your business to ensure you are taking the necessary steps to protect your business. Nardone Limited represents employers in many different areas such as: (i) employment contracts; (ii) labor and employment representation; and (iii) human resource representation. If you would like more information regarding employment agreements, contact Nardone Limited.