One of the most common questions I get asked by both business clients and individuals is whether their non-compete agreement is enforceable. As explained below, a number of points will determine the answer, but none are more important than what essentially amounts to a “wild card” — the judge deciding your case.
Attorney Brett Snider wrote an informative article, “Is the Noncompete Clause in Your Work Contract Legal?” His article covers the big-picture legal issues that both employers and individuals need to generally consider when it comes to noncompete enforceability. But one point that is worth building upon is the role a judge plays in deciding a noncompete lawsuit.
Specifically, Mr. Snider notes:
The law bends toward allowing former employees to move on with their careers and allowing them to work, but you should still be aware of your employer’s noncompete agreement.
I’ve been on both sides of this bend when it comes to non-compete issues, i.e., representing employers and former employees. Its great when you’re on the right side of the bend, but not so much when you’re not.
Case in point, last week the judge presiding over a noncompete lawsuit filed against my clients had all counsel in chambers for an early intervention and scheduling conference. The judge asked two questions relevant to the enforceability issue of the noncompete agreement in dispute:
- How long is the restriction; and
- What was the geographic scope of the restriction?
The judge was told the restriction period was five years and covered the three counties making up Metro Detroit. In response, the judge simply stated those restrictions were not reasonable. It was enjoyable listening to opposing counsel politely try to explain why the judge was “wrong” on this assessment.
Whether the judge’s off-the record assessment ultimately becomes a ruling in this lawsuit remains to be seen. Even if it does not, it certainly changed the focus of the lawsuit away from expensive litigation to settlement discussions. Nonetheless, this example also illustrates the uncertainty that both employers and employees face when it comes to enforcing a non-compete agreement.
Closing Thoughts on Noncompete Enforcement
Certainly from a client’s perspective one of the most frustrating responses to legal question is to be told that the answer “depends.” However, when it comes to whether a noncompete agreement is enforceable, the answer will almost always be that it depends because ultimately that question and associated issues will be decided in the sound discretion of the the person who happens to be the judge.
Even so, there are a number of steps employers can take to minimize the likelihood a judge will find company’s non-compete agreement is not enforceable. And the beginning point in this analysis is having a well-written non-compete agreement that provides reasonable protection to the employer.
This article was written by Michigan employment attorney Jason Shinn who routinely handles Michigan noncompete legal issues and lawsuits.