Labor Lawyer Question

[Piobaire]

If your contract has a noncompete clause, basically will not work in a similar industry for X amount of time, in Y geographic area, how enforceable are these? If you worked out a notice and went to the competition, what are the odds of getting a successful suit brought against you?

 

[lawyerdad]

Originally Posted by Piobaire

If your contract has a noncompete clause, basically will not work in a similar industry for X amount of time, in Y geographic area, how enforceable are these? If you worked out a notice and went to the competition, what are the odds of getting a successful suit brought against you?

Varies greatly by jurisidiction. California, for example, essentially prohibits these unless they're made in connection with the purchase of the goodwill of a business. My very general sense -- general to the point of near uselessness given the geographic variations -- is that courts tend to be reluctant to enforce such agreements absent a concern that there will be trade secrets divulged, etc. I think that agreements prohibiting non-solicitiation of customers tend to fare better in court than strict non-competes (largely because there is perceived to be a strong public policy in allowing people to practice their profession and earn a living).

 

[Piobaire]

Originally Posted by lawyerdad

Varies greatly by jurisidiction. California, for example, essentially prohibits these unless they're made in connection with the purchase of the goodwill of a business. My very general sense -- general to the point of near uselessness given the geographic variations -- is that courts tend to be reluctant to enforce such agreements absent a concern that there will be trade secrets divulged, etc. I think that agreements prohibiting non-solicitiation of customers tend to fare better in court than strict non-competes (largely because there is perceived to be a strong public policy in allowing people to practice their profession and earn a living).

Thanks. Yes, no trade secrets, no stealing of customers. There is also a clause about recruiting staff but this would not happen. If the BoD is populated by several attorneys, they could still tie one up in costly legal knots though?

 

[NoVaguy]

Originally Posted by Piobaire

If your contract has a noncompete clause, basically will not work in a similar industry for X amount of time, in Y geographic area, how enforceable are these? If you worked out a notice and went to the competition, what are the odds of getting a successful suit brought against you?

more employment law than labor law. but the enforceability depends on the state. General trend is to find these more and more enforceable. The more limited the time, the more limited the geographic area, and the more limited the industries/jobs, the more likely it is enforceable. There is a tendency to strictly construe against the employer and in favor of the employee.

I think for employees in the medical and legal fields, these are even harder to enforce, since public policy grounds towards the clients come into play.

see Valley Medical Specialists v. Farber, 982 P.2d 1277 (1999)

 

[Piobaire]

Originally Posted by NoVaguy

more employment law than labor law. but the enforceability depends on the state. General trend is to find these more and more enforceable. The more limited the time, the more limited the geographic area, and the more limited the industries/jobs, the more likely it is enforceable. There is a tendency to strictly construe against the employer and in favor of the employee.

I think for employees in the medical and legal fields, these are even harder to enforce, since public policy grounds towards the clients come into play.

see Valley Medical Specialists v. Farber, 982 P.2d 1277 (1999)

Thanks. But did you mean to say the general trend is more and more enforceable or non? The rest of the post indicates "non," but this is something I'd like to be fairly sure on before paying for IRL legal consultation.

 

[lawyerdad]

Originally Posted by Piobaire

Thanks. Yes, no trade secrets, no stealing of customers. There is also a clause about recruiting staff but this would not happen. If the BoD is populated by several attorneys, they could still tie one up in costly legal knots though?

To a certain extent, but when you're talking about the narrow question of the enforceability of a non-compete and there are no issues of trade secrets, client-stealing, or employee solicitation (which lend themselves to factual disputes and thus can result in lengthy, costly discovery) it's somewhat easier to get a (relatively) quick, inexpensive ruling from the Court.

Nova's points about the legal and medical fields are well-taken.

 

[NoVaguy]

Originally Posted by Piobaire

Thanks. But did you mean to say the general trend is more and more enforceable or non? The rest of the post indicates "non," but this is something I'd like to be fairly sure on before paying for IRL legal consultation.

I think it's becoming more and more enforceable, in part because

(1) They used to be completely unenforceable, now they seem to be more enforceable.
(2) People are drafting them more and more narrowly, because broad convenants tend to piss off the courts.

So part of it is the narrowing of the convenants - I think most try to keep it to a very specific industry (such that the employee can easily get work, and that the restriction in effect just prevents spread of trade secrets), and they tend to be limited in time (1 or 2 years).

I really plan to specialize in IP, not employment, but you can see how the IP issue kind of affects this. A lot of times people are worried about someone taking trade secrets with them to the next job.

The state by state thing is really important - some states, such as California, have almost complete bars on these (and California is what, 50% of the tech industry?).

 

[Piobaire]

Thanks guys. There's enough here to warrant my investing a few hundred bucks in IRL legal advice. Cheers.