In many industries, competition is fierce for certain key employees. Beyond the employees themselves, companies also need to protect their interest in retaining a customer base. To further these goals, an employer may ask employees to sign some type of restrictive covenant agreement, usually being a non-compete and/or non-solicitation agreement.
Duration of Restrictions, Geographic Area, and Most Important Factors of Reasonableness
As its name implies, a non-compete agreement restricts an employee from directly competing with his or her employer—or from working for a competitor of the employer—for a specified period of time in a given geographic area. Similarly, a non-solicitation agreement will prohibit a former employee from attempting to lure away either the employees or customers of the company once his or her tenure of employment at the business has ended.
Non-competes and non-solicitation agreements can be useful for an employer, but only if they can be justifiably expected to hold up in court. A judge will not enforce a non-compete or non-solicitation agreement that is deemed unreasonable. A non-compete that is most likely to withstand judicial scrutiny is one that toes a delicate line between protecting the interests of the business and respecting the right of the employee to earn a living.
Under Connecticut law, judges look to several factors to determine whether or not a non-compete is enforceable. The two most heavily weighted factors are the length of time the restrictions are imposed and the size of the geographic area in which competition is prohibited.
An agreement prohibiting competition indefinitely is unlikely to withstand judicial scrutiny. While time limits that are deemed reasonable will vary according to the type and size of business, many valid non-competes apply restrictions that last a year after the employee has left the company. Connecticut courts have even upheld non-competes that restricted competition for two years.
Likewise, location restrictions that extend “worldwide” or otherwise cover an immense geographic area will not be found reasonable, even if they are only effective for a reasonable length of time. Some non-competes restrict competition within a certain distance (e.g., within a 10-mile-radius of the employer’s principal place of business), or they may list specific cities or towns in which competition is prohibited.
Courts generally will not uphold geographic restrictions that extend beyond places where the employer is already operating or is likely to expand into. In Connecticut, courts have been reluctant to approve any radius limitation of more than 35 miles.
Beyond length of time and geographic scope, a judge may also look to the fairness of the protection for the business, the employee’s ability to continue to work in his or her profession should the agreement stand, and the public interest. For example, professionals who provide essential services like access to the legal system and medical care may be more likely to get a non-compete invalidated in an underserved area).
Contact a Connecticut Non-Compete Litigation Lawyer for Help
If you are running a business and need to safeguard your client list and your investment in employees, a non-compete or non-solicitation agreement can serve you well. When such an agreement is breached, you may need to turn to legal action to enforce the measures you have taken to protect your interests. On the other hand, if you are an employee or former employer subject to an unreasonable non-compete agreement, the effect on your career can be stifling, and you may need to defend the validity of your right to compete. In either case, the assistance of a Connecticut non-compete litigation lawyer is essential, and you should contact one as early as possible in the dispute.