Be Wary of State-Specific Requirements for Noncompetition Agreements
One size most certainly does not fit all when it comes to noncompetition agreements. Every state has its own requirements when it comes to the enforceability of employee noncompetition agreements. In some, such as California, noncompetition agreements are unlawful by statute. In other states, such as Colorado, noncompetition agreements may only be enforced in certain specific settings, such as the sale of a business. In many states, however, noncompetition agreements will be enforced if they protect the company’s legitimate business interests and are reasonable in time, geographic scope and the scope of the limitations on the employee’s ability to perform his profession. Where noncompetition agreements are not void as a matter of law, they are great fodder for litigators because there is no uniform definition of “legitimate business interest” and no consistent test to determine if the time, geographic scope and the scope of limitations on the employee’s ability to perform his profession are “reasonable.” These criteria are very fact and case specific.
Although most litigation of noncompetes focuses on whether the business interests of the employer are “legitimate,” and/or if the geographic and temporal scopes of the limitations are “reasonable.” Equally important to the enforceability of a … Keep reading