What makes a non-compete agreement valid?

On Behalf of | Feb 17, 2022 | Employment Law |

Generally, people in Michigan can choose which jobs they will take, if offered. They may find these jobs on their own or they may be recruited by another company. While most of the time people have control over which jobs they will take and which jobs they will not, many people sign non-compete agreements when they begin employment with their current employer. Most non-compete agreements prohibit current and former employees from working with a competitor for a period of time.

This will limit which jobs people can take and can be a real detriment as people look for new employment opportunities. Because of this fact, non-compete agreements must meet certain requirements to ensure that they are valid as generally it is best when people are free to work where they want.

Requirements for non-compete agreements

In order to be valid, the non-compete must be in place to protect reasonable business interests. The agreement also must be reasonable in the following ways:

  • How long it prohibits the employee from working with competitors
  • The geographic area in which they are prohibited from working
  • Which types of businesses that are included in the agreement

The key word when determining whether the non-compete agreement is valid is reasonable. While it is clear, the prohibitions in the non-compete agreement must be reasonable, what is reasonable is not defined in the statute. Whether the agreement is reasonable is determined on a case by case basis depending on the circumstances.

There are many people in Michigan that sign non-compete agreements. People may not read the agreement carefully or realize the extent of the restrictions. They may find themselves taking new employment and then being sued by their former employer for violating the non-compete agreement. However, just because the former employer initiates a lawsuit, it does not mean that the non-compete is in fact valid. Experienced attorneys understand the various requirements for non-competes and may be a useful resource.