Legally Enforceable?
Yes, a non-compete is legally enforceable in Michigan if it is “reasonable as to its duration, geographical area, and the type of employment or line of business.”[1]
A non-compete as an ancillary to the sale of a business is allowed and viewed more favorably than those made with employees.[2]
An attorney may not be able to enter into a non-compete agreement that restricts their ability to practice law.[3]
Continued Employment
If an employee is at-will, then continued employment will be sufficient consideration for a non-compete. However, if an employee is tied to a fixed-term contract, then the court will determine that no consideration has been presented.[4]
Maximum Term
The geographical area and duration are viewed together to determine whether they are reasonable. The courts have ruled that 6 months to 3 years is legitimate.[5]
If the employer is conducting business in multiple States and/or foreign countries, the “restriction that is not limited in its geographic scope is not necessarily unreasonable.”[5]
Blue Penciling
Michigan statutes enable courts to limit and render a non-compete to be made reasonable if, in any respect, is found to be unreasonable.[6]
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