Can I get out of a restrictive covenant after termination?

On Behalf of | Jul 2, 2020 | Retaliation Termination And Forced Resignations |

If your boss recently terminated your employment or forced you to resign, restrictive covenants may affect your future job landscape. According to the Michigan State Bar, Michigan places few prohibitions on restrictive covenants, and as such, these agreements are standard in many employment agreements.

You may have some legal recourse even if an agreement you signed is particularly strict. Courts in Michigan retain the power to edit out any parts of these contracts they deem unreasonable.

State standards of reasonableness

State law determines reasonableness in restrictive covenants by examining several criteria, “its duration, geographical area, and the type of employment or line of business.” In looking at these issues, a court will consider the level of threat implied by potential violations of your nondisclosure, noncompetition or nonsolicitation agreement.

Considerations for the court

Some fields pose a greater threat than others when it comes to competition, solicitation and trade secrets. For example, if an insurance salesperson moves from one company to another, it is likely that some customers will move their policies to the new insurer. By contrast, a construction worker or electrician poses little threat doing the same work for another business.

Another criterion a court may take into account is proximity. Businesses in the same neighborhood or city are typically more competitive than those several hours apart. If your former employer was in Marquette and the prospective job is in Birmingham, a court is less likely to recognize a restrictive covenant than if the new job prospect is a mile away.

A court will also consider how long a restrictive covenant lasts. Michigan courts tend to recognize agreements that are valid for a year or less. The longer the agreement, the more favorably a court may look on your attempt to dissolve or modify it.