When is a non-compete unenforceable?

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When is a non-compete unenforceable?

I work for a small company that has clients nationwide; after working here 3 years I was asked to sign a non-compete. A week before I was asked to sign the agreement my boss, who had worked here 18 years, had been fired for not signing the non-compete and I am certain I would have been fired if I had not signed. I am now in charge of marketing for our organization and I am pretty sure I am the only employee that has signed the non-compete agreement. The agreement states that I will not for a period of 3 years work for another organization that “supports” the type of employee benefit administration that we do. Is this agreement enforceable?

Asked on January 31, 2012 under Employment Labor Law, Missouri

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is enforceable, but the duration may be too long: when there is a dispute, courts will "blue pencil," or reduce in scope, a non-competition agreement which is seen as excessive. Since your current company has nationwide clients, it is not unreasonable for the noncompete to not be limited to a narrow geographic area. However, it is very rare for a non-owner of a business to be held to a non-competition agreement that is more than a year long; it  is therefore likely that the duration of the agreement could be modified downward by a court. Also, another point of possible contention would be what constitutes "support" in this case...for example, if your company handles benefits administration, would a company which provides purely tech support for a client's payroll software be one that "supports" your company's type of employee benefit administration? I would argue not, but clearly, the exact scope of what is meant by "supports" is a place you and your employer could come into conflict, and where, if that happens, a court would have to interpret what is meant by that.


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