Enforcing noncompete agreements

On Behalf of | May 6, 2022 | Employment Law |

In Michigan and other states, many employers use non-compete agreements to help shield their trade secrets and prevent former employees from soliciting customers and engaging in other activity that could be detrimental to the company’s success. While companies are generally encouraged to use non-compete agreements to help protect themselves, what about protections for the employees who sign them? Sometimes, non-compete agreements go too far in limiting a former employee’s choices with regards to finding gainful employment in his or her field. Here are some items to consider about non-compete agreements and how the courts will enforce or throw out the agreement should litigation occur. 

Non-compete caveats 

Any noncompete agreement will prohibit former employees from going to work for a company’s direct competition. The language can include a specified period of time as well as a geographical area the employee cannot seek employment from a competitor. The agreement may also contain language regarding the sharing of trade secrets (nondisclosure) and barring the employee from soliciting existing customers of his or her former company (non-solicitation.) 

Whatever the language contained therein, the court will typically look at five areas of the noncompete agreement to determine if it is valid and does not unduly infringe upon the worker’s rights to maintain gainful employment in his or her career field. Those areas are as follows: 

  • Employer established the noncompete to help prevent potential harm to company 
  • Noncompete is for a specific period of time, and that time is reasonable and commensurate with employee’s role and length of tenure 
  • Geographic area former employee cannot seek employment from competitor 
  • What impact will the noncompete have on the employee to find other work? 
  • What interest to the public does the noncompete agreement serve? 

The court may invalidate a noncompete if it deems any of these stipulations are unfair. However, what courts consider unfair can vary widely and even vary regarding the type of position the employee held and for how long. Although many employers require noncompete agreements in Michigan, a prospective employee can still negotiate the terms of the agreement. For assistance and advocacy, the employee can turn to an experienced employment law attorney in the state.