Are non-compete agreements enforceable if the employee is terminated? The answer depends on which state the employee is in, as each state has its own laws regarding the enforceability of non-compete agreements.
States around the country vary in how they approach the enforcement of unreasonable non-compete agreements. While the majority of states allow their courts to “blue pencil” or rewrite restrictive covenants to make them reasonable, three states do not permit such reformation, and four states have no clear legal guidance on whether blue-pencilling is permitted, leaving employers in limbo.
Enforcing non-compete agreements is as much of a business decision as it is a legal one. Having a non-compete agreement that is legally enforceable, allows you to decide whether it makes business sense to enforce it against a particular employee. Without a legally-enforceable non-compete agreement, however, the business reasons may not even matter.
While helping hundreds of companies to enforce their non-compete agreements and advising many employees on how to get out of them, I noticed that most companies make the same mistakes when it comes to drafting and enforcing their non-compete agreements. Here are the top ten.