Those Fossils in Your Employee Files are from Non-competosaurus
By Cory Reiss
New business clients often hand me a non-competete agreement and ask to enforce it against a former employee gone rogue. And all too often, that paper is like a dinosaur tooth: once fierce but now just a fossil.
Requiring employees to sign agreements not to work for a competitor has become so common that even your pizza delivery driver may have signed one. But in North Carolina, the ground has been shifting over the years to cover pre-existing agreements in dust.
A series of court decisions has rendered many non-competition agreements difficult or impossible to enforce. The law generally allows enforcement if the restraint covers a reasonable period of time and a reasonable territory. But courts have been narrowing those parameters, often based on fact-specific issues such as the nature of the business, where it actually operates, and the employee’s job description and contact with customers.
A non-compete that’s more than a couple of years old, or even a newer one that wasn’t drafted with these changes in mind, probably shouldn’t give employers confidence that they can hold employees to it. A non-compete should be tailor-made for your business, the types of employees subject to them, and the goals they are expected to achieve.
It’s probably a good idea to revisit this issue if enforceable non-competition agreements are of real concern to your business. Otherwise, you may find that your trusted legal beast has gone extinct.
Cory Reiss maintains a broad legal practice but focuses on business litigation, ranging from complex cases in the North Carolina Business Court to more straightforward contract disputes. His experience also extends to personal injury and wrongful death cases, including medical malpractice.