with regard to the area, courts prefer that the employer
have a narrowly defined geographic area from which
the employee will be prohibited from working. Some
courts insist that an employer has no legitimate business
interest in enforcing an agreement in geographic areas
where the employee did not work. It has determined
to be outside the employer’s legitimate interest when
the employer itself is not doing business in a certain
geographic area. For example, if an employer is regional,
but insists on enforcing its non-compete agreement
“throughout the world,” it is extremely likely that the
court will not enforce such a broad agreement. Third,
the activities proscribed have been narrowed further by
the courts. Courts have held that an employer does not
have a legitimate business interest in keeping an
employee who has worked as a sales person
from being a janitor for a competitor.
The theory is that the employee’s
skills and information gained as a
sales person would have no benefit
to him (or his new employer) as a
janitor with a competitor. (Even
though that is the example often
used by attorneys litigating against
a restrictive covenant, we have yet
to see a case where a sales person
has in fact sought to be a janitor
elsewhere.) Regardless, courts seem
to be more likely to enforce an agreement
if the employer limits its application to
performing similar duties for a competitor.
had no contact with or information respecting those
customers). Also, we have seen that some courts are
reluctant to enforce the non-solicitation of customers
with whom the employee has not had contact for several
years.
We normally recommend that an employer also include
a provision against the use of confidential information.
(Note, however, that a company’s failure to take
reasonable steps to protect its confidential information
may result in a court’s refusal to grant it protection
under trade secret laws.) Included in a confidentiality
of information provision should be the requirement for
the employee to return all company property, including
data, upon termination of employment.
Other clauses which should be considered
include a protective provision by which
the employer advises in writing that its
employee should not use confidential
information concerning its former
employers and disclosure of any
non-compete agreements in effect
from a former employer. We also
suggest including a requirement that
the employee notify the company
of subsequent employment during
the restrictive period. An agreement
should include a provision for payment
of attorney’s fees and costs and the remedies
which may be sought in enforcing the agreement. We
suggest including which state’s law should be applied
in interpreting the agreement and we may even suggest
including where the case may be initiated (we prefer
Indiana). Finally, we recommend that the agreement
be subject to review by the employee’s legal counsel if
the employee so chooses. It takes some of the equitable
argument away from an employee if he is unable to
claim that the agreement was “forced down his throat”
without the opportunity to be reviewed by his own
counsel.
Another type of restrictive covenant is a non-solicitation
provision. We often draft non-solicitation provisions in
agreements and these are more likely to be enforced
by a court than a non-compete agreement. A typical
agreement would restrict an employee from soliciting
fellow employees to leave their employment. The
courts seem to be bothered by the idea of “corporate
raiding,” where a group of employees are solicited to
work for a competitor. With regard to solicitation of
customers, a court may be reluctant to enforce a non-
solicitation agreement where the customers are not Ple ase let us know if we may be of assistance in drafting
those who worked with the employee previously (i.e., or reviewing restrictive employment agreements for
restricting a large customer list against employees who you or your company.
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