Legally Enforceable?
Yes, a non-compete is legally enforceable if the non-compete is:[1]
- Reasonable in the sense that it is no greater than is necessary to protect the employer’s legitimate business interest;
- From the standpoint of the employee, the restraint must be reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood;
- Partial or restrictive in its operation, either as to time or place;
- Supported by valuable consideration; and
- The restraint is reasonable from the standpoint of a sound public.
The Supreme Court has ruled a non-compete has a balance between the employer protecting themselves and the employee’s right to earn a living.[2]
“While recognizing the legitimate interests of a business in protecting its clientele and goodwill, we are equally concerned with the right of a person to use his talents to earn a living.”
If a non-compete is presented to an employee after being hired, there must be “new consideration” presented such as their position or duties.[3]
“If an employment relationship already exists without a covenant not to compete, any such future covenant must be based upon new consideration.”
An attorney is prohibited from entering into any type of agreement that restricts their right to practice law.[4]