Legally Enforceable?
Yes, a non-compete is legally enforceable in Louisiana under the following conditions:[1]
- Must mention specific parishes and localities (and the employer must operate in such areas);
- Must mention the specific products and services refrained from working; and
- It cannot be for more than a 2 year period.
The non-compete scope of work should be specifically mentioned in the agreement.
For example, in Paradigm Health System v. Faust (2017), a non-compete was considered “overly broad” when Dr. Faust was prohibited from working in the “practice of medicine” and not specifically “pain management.”
Due to the broad language, the agreement was considered invalid under State law.
Anyone that works or is involved in the sales of motor vehicles is prohibited from entering into a non-compete.[2]
Even if the person is a manager of salespeople or related role, is exempt.[3]
An attorney is prohibited from entering an agreement that limits their ability to practice law.[4]
Continued Employment
Partnerships and Shareholders
Effective August 1, 2020, Louisiana allows non-competes for shareholders and partners in a business entity. It will enable entities to prohibit its owners from participating in related businesses in localities where the entity operates and for a period of up to 2 years.Such non-compete covenants can also be included in the entity’s operating agreement, corporate bylaws, or partnership agreement.[6]
Sale of a Business
Blue Penciling
A non-compete can be modified to the extent necessary to be legally enforceable.Blue penciling does not apply if the agreement fails to specify a geographical area.[8]
If a non-compete does include a geographical area but has other terms that are overly broad, then the agreement can be modified.[9]
Any agreement that is to be modified under a Louisiana court must have a severability clause.[10]