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How long is too long?
Again, there is no clear line in the sand as to what is too long for a restrictive period. Typically, one to two years is considered the extent to which a restrictive covenant will be enforced, but an enforceable duration really comes down to what business interest is protected. When evaluating the length of a restrictive period, consider how long is needed to protect what is important to the employer. By way of an example, if an associate only works for a short period of time, such as a month or two, can it really be said that an employer needs two years to recover when that employee leaves? How long will it take for you to introduce your patient to a new associate and establish a relationship to maintain that patient? How long does financial information like profit margins or pricing structures remain relevant? If there was unique, cutting-edge training you provided your associate, how long until the training or knowledge will be generally known in the marketplace or how long until you can train a new employee to get to the same level as the departing one?
These are the types of considerations that go into how long a restrictive covenant can be enforced.
Was the agreement fairly negotiated and supported by adequate consideration?
Although there is not a requirement that each party to the agreement have equal bargaining power, there should be evidence that the employee had the opportunity to review the agreement and consult with counsel of their choice prior to entering into the same for it to be enforceable. Likewise, since the courts recognize that by executing a restrictive covenant, the employee is giving up something of value, they must receive something of value in return. At the inception of the employment relationship, the offer of the job will be deemed adequate consideration to support the restrictions. However, if an employee is asked to sign a restrictive covenant after they have already been employed, additional consideration is likely to be required. In addition, the exchange of some nominal value is likely to be insufficient. The consideration need not be monetary in value, it could be additional employee benefits, such as time off. The question is not the type of benefit, but instead, its value.
As a result, if you are the employer attempting to have non-competes executed with current employees, do not expect them to be enforceable should you provide the associate with a hundred dollar bonus or similarly minor benefit.
JULY / AUG 2016 | PENNSYLVANIA DENTAL JOURNAL 33