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What does a noncompete agreement require to be held enforceable?

On Behalf of | May 24, 2019 | Business Formation & Planning |

It varies.

That is the short and concededly less-than-absolute answer.

At one end of the spectrum in the United States are locales where courts frown heavily on virtually any contract that seeks to control a worker’s autonomy following his or her exit from a company. We note in an article discussing noncompetes on our website at the established Manhattan business law firm of R3M Law that California is a prime example of that judicial attitude. Courts there “will not enforce traditional noncompete agreements except in extremely limited circumstances.”

Conversely, other states take a more nuanced and middle-road position on the subject matter. The bottom line in New York, for example, is that a noncompete will generally be held enforceable by a court if it is “reasonably and properly limited.”

Although that is a clear standard, there is obviously some inherent subjectivity in the analysis in any given case. That makes it advisable for any employer seeking to rightly safeguard its legitimate business interests through relevant contracts with key employees to consult with proven commercial law attorneys.

Courts will unquestionably scrutinize a noncompete with vigor and, as we note on our website, “a measure of suspicion.” A proven legal team knows intimately well what they are looking for and how to deflect judicial animosity toward an agreement that seeks to limit employee prerogatives.

Several factors must be carefully – and, in a court’s view, reasonably – addressed by an employer in a noncompete. They include the contract’s duration, its geographic scope and sufficient evidence to convincingly convey that enforcement is necessary to protect key commercial interests.

Experienced legal counsel can help craft an agreement that a court will view as balanced and tailored, thus strengthening the case for enforceability.

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