Non-Compete Clauses

Transcript

ELLIOT WAGONHEIM: If your company is sales oriented and you have got three stellar sales people that are responsible for 75% of your business, have you locked them down to contracts to what we call restrictive covenants meaning covenants not to compete, or non solicitation agreements meaning that if they leave, they cannot take your customers as their own or bring your customers to another competitor.

MARY KEATING: There is a word on the street that these provisions are never enforceable, that is not the case, often they are enforceable. If you have the right kind of contract, you can go to court and you can convince a judge to make the employees stop that new job where they are trying to bring customers over to their new employer. You can stop them right in their tracks and that usually is quite effective.

ROCHELLE EISENBERG: None of us like to think that we are replaceable, but most people are, so if you would have a restrictive covenant, let's say of 10 years, that would be far too long. Typically, one to two years is all that you need.

MARY KEATING: If you say you cannot do this anywhere else in the country, it is usually legal only if it is something like a hi-tech job where indeed there are no geographical borders, so for example if you work at home or if your internet connection or that is something that you can do, it might be reasonable to say you cannot do this even if you are working for somebody in Idaho because your web customers can be anywhere, but you are saying that you cannot manage a sandwich franchise shop anyway within the whole state of Idaho, that goes too far. You do not want to find yourself in a lawsuit over this because the lawsuits are expensive. On the other hand, if your job is higher level than sandwich making ability and you are making good money, your contacts really are valuable to you, perhaps you have been in the field for 20 years and you worked for one year for a company that imposed a covenant not to compete on you, it might be worth litigating.