Wednesday, February 20, 2008
Forbes.com has an article advising employees (and presumably independent contractors) in their negotiation of non-compete clauses. I much prefer the "in pictures" version of the advice. The 5 tips mirror my classroom teaching on the subject: (1) consult with an attorney, (2) limit the geography, (3) limit the span, (4) explore other restrictions and (5) get paid -- for the time you're locked up by the non-compete. Funny thing, though, is much of this advice could really be characterized as for employers -- keeping geography and span reasonable only serve to make the covenant enforceable. If the duration and geographic limits are unreasonable, the covenant won't hold up in court and the onus is on the employer to enforce it -- if the employee is a "lower level lieutenant" or "line worker" (the article's language), is the employer really going to invest the money it would take to enforce the non-compete? (Perhaps, if only to make an example of the employee). But, other than highly compensated employees, my impression is that the purpose of a non-compete is less about its actual enforcement and more about its in terrorem effect.
[Meredith R. Miller]