Legally Enforceable?
Yes, a non-compete is legally enforceable if it meets the Supreme Court requirements:[1]
- Where they are incident to an employment relationship between the parties to the covenant;
- The restrictions are reasonably necessary for the protection of the employer; and
- The restrictions are reasonably limited in duration and geographic extent.
To determine whether or not a non-compete a reasonable, a court will apply the “balance test” as described:[2]
“In determining whether to enforce a non-competition covenant, this Court requires the application of a balancing test whereby the court balances the employer’s protectible business interests against the interest of the employee in earning a living in his or her chosen profession, trade or occupation, and then balances the result against the interest of the public.”
A promise of continued employment is not sufficient consideration for an employee to enter into a non-compete.[3]
However, if the employee gets a “corresponding benefit or change in status,” the non-compete will be determined to have sufficient consideration.[4]
An attorney is prohibited from entering into a non-compete or any covenant that restricts their right to practice law.[5]