Are non-compete agreements really enforceable in our State? What are some special considerations in the financial and medical industries? Is injunctive relief available to protect our customer relationships and trade secrets? Can we terminate an employee and still enforce a non-compete agreement? Should we include a liquidated damages provision in our restrictive covenant agreements? What damages are available to our company should we prevail?

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2. Assets involve more than a company’s real estate and
equipment.
Improved technology makes it easier to move
information.
Employee mobility and technology raise the risks that
such assets will find their way to a competitor.
These assets can and should be protected.
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3. Non-competes and similar agreements aren’t worth the
paper they’re written on.
o Not true in most States.
We don’t have any protectable information.
o All employers have confidential, proprietary and trade secret
information.
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4. Identify the information you want to protect:
o Inter-disciplinary assessment.
Where is that information?
o Not just with employees:
• Customers.
• Vendors.
• Website.
• Social Media.
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5. Employee/customer relations issues:
o Likely reaction to efforts to protect.
Cultural issues:
o Appetite for litigation.
o Industry issues.
Multistate issues:
o One size fits all to state-by-state.
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6. Consider implementing physical and virtual security
protections
Examples:
o Lock and key
o Stamping documents “confidential”
o Training employees
o Limiting employee access
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7. Common Law.
Statutes.
Contracts.
o Information subject to protection:
• Trade secrets.
• Proprietary information.
• Other confidential information.
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8. Offers protection beyond contracts, or in the event of no
enforceable contract
Covered by statute or common law
Protects the misappropriation, disclosure or use of:
o Information of value
o At least part of the value comes from the fact competitors don’t
know it
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9. One of the most effective ways to prevent the loss of
business information.
Restricts employees’ use and disclosure of business
information.
Non-Competition - Enforceable in most states if the
employer can establish a legitimate protectable interest
and the covenant is reasonable in time and geographic
scope.
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10. Non-Disclosure
o A policy is not a contract
Give everything back
Non-Solicitation – employees
Non-Solicitation – customers
Non-Compete
Note: Also apply during employment
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11. Length of time of the restriction.
Geographical area covered.
Scope of business covered.
Fairness and business needs.
Extent of the restraint on the employee's opportunity to
pursue his occupation.
Extent of interference with the public's interests.
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12. There are certain provisions that should be considered
standard in agreements in most jurisdictions.
However, there are jurisdictions with specific
requirements.
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13. If newly hired employee, make getting the job and the
access to confidential information associated therewith
the consideration:
o The agreement should be referenced in the offer letter and
employment contract, and should be signed before employment
begins.
If current employee, provide something of value that the
employee would not otherwise have received.
Agree to provide employee access to business
information.
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14. Define and limit use of business information.
Return all property upon cessation of employment and
upon request, whether or not within definition.
Prohibition against solicitation of employees.
Prohibition against solicitation of/doing business with
customers.
Prohibition against unfair competition.
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15. Consider a tolling provision:
o Time for non-solicit/non-compete is tolled during the period of
any breach.
Provision clarifying that the agreement supplements,
rather than replaces, legal obligations.
Notice of agreement, new employment, change of
address.
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16. Claim by employee not a defense.
Agreement should apply to other positions, regardless of
compensation.
Agreement should apply to subsidiaries/
affiliates/successors/assigns.
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17. Irreparable Harm:
o Acknowledges that breach will cause and entitle employer to
seek and obtain injunctive relief.
Attorneys’ Fees:
o Beware of generic “prevailing party” language (some courts
interpret this as a requirement for success on the merits).
Liquidated Damages?
Forfeiture:
o Conditions the receipt of certain benefits/compensation on the
promise of non-competition.
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18. Most courts will “blue pencil” overly broad restrictions to
narrow restrictions and enforce the remainder of the
covenant.
Some states apply a strict blue pencil rule, meaning
these states will cross out, but not rewrite provisions.
Employer should indicate its intent to make terms
severable, both by saying so and with severable
restrictions.
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19. Choice of law provisions.
Choice of venue provisions.
Jury trial waivers.
Arbitration?
o Particularly if confidentiality is a concern.
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20. California: Generally non-competes are unenforceable.
North Dakota: Non-competes are considered “unlawful
and voidable,” except in sale of business and partnership
dissolution.
Oklahoma: Same (can prohibit solicitation of established
customers).
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21. Connecticut: Presumption of irreparable harm.
Florida: State statute provides a presumptive “pass.”
Georgia: Same.
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22. Louisiana: Specify parish(es) or municipality(ies).
Employer must do business there.
Pennsylvania: Considers the circumstances under
which the employment relationship terminated.
Texas: Non-compete is enforceable only when ancillary
to an otherwise enforceable agreement.
Virginia: No blue pencil.
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23. International Enforcement.
The Financial Industry
The Medical Industry
Playing Offense and Defense
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24. Actually, before employment ends the employer should
think about its approach to departing employees:
Exit interview
Letter to departing employee
o Must make sense under the circumstances
Letter to competitor hiring employee
o Again, see above
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25. Conduct internal discovery, including forensic computer
evidence.
Do not review an employee’s laptop without expert
assistance.
Do not immediately wipe and reissue the employee’s
computer or other devices.
Litigation.
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