Understanding the Rules of Connecticut Non-Compete Agreements

Understanding the Rules of Connecticut Non-Compete Agreements
Lawyer helping his client draft up a non-compete agreement

A Connecticut non-competition agreement, or non-compete, is a fairly standard contract that many businesses enter into with their employees. There are several important rules that must be followed in order for Connecticut courts to enforce these agreements. If you are in need of a non-compete for your business or have questions about enforcing one, we can help.

Generally, non-compete bars an employee from engaging in a business that competes with his or her former employer’s business. They are not the same as non-solicitation or non-service agreements. The non-solicitation prohibits a former employee from luring former colleagues from the employ of the business. The latter disallows former employees from providing services to customers of his or her former employer.

The typical non-compete will prohibit an employee from working for a competitor for some amount of time. The agreement will also usually restrict an employee from working for a competitor in a certain geographic area. Disputes usually arise when an employee becomes dissatisfied with the job and wishes to explore his or her professional options. Although an employee cannot be forced to enter into one, an offer of employment may hinge on agreeing to it. For this reason, having a Connecticut business attorney draft or interpret an agreement can help a company understand its rights.

Enforceability of a Connecticut non-compete agreement will depend upon several key factors. Courts tend to scrutinize these agreements more closely because they restrict the ability of a former employee to work. The following features will be examined to determine whether to uphold a non-compete:

The length of time of the restriction. Longer time periods are usually harder to enforce, but every such restriction is evaluated on a case-by-case basis.

The geographic area of the restriction. The area must be reasonable, so for instance, could not include (as an extreme example) the entire country. The larger the area, the less likely it will be considered reasonable.

Whether the employee can pursue his or her occupation and earn a living if the agreement is enforced. In other words, this is a consideration of the impact of the non-compete on the former employee’s livelihood.

The fairness of the restriction to the former employer. Non-competes only benefit the former employer, and the benefit must be fair and just under the circumstances.

The public interest. Although broad, the court is empowered to examine whether the restriction hurts or helps the public at large.

In helping draft a non-compete, your Connecticut business lawyer would pay closest attention to the time and geographic restrictions. These tend to be the most hotly contested aspects of such agreements. In most cases, if both of these are upheld as reasonable, the entire non-compete will.

Because non-compete agreements are evaluated on their own individual merits, there are few black and white rules concerning them. However, there is one exception for physicians that was recently enacted. Public Act No. 16-95, adopted in 2016, limits these agreements for doctors. No such agreement can impose more than a one-year restriction on physicians who leave a practice. The geographic scope of such a restriction is limited to 15 miles from the “primary site where such physician practices.” There are other important elements of Public Act No. 16-95. If you employ healthcare professionals who may be subject to this new law, a Connecticut business law attorney can assist.

We’re Here to Help With Your Business’s Legal Needs

Non-competes offer important protection for Connecticut companies. When drafted properly, they can withstand legal scrutiny and promote the continued vitality of businesses. Let the experienced attorneys of Aeton Law Partners serve your business’s legal needs. Call us today.

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