Non-compete agreements, do they hold up?

February 27, 2018, 08:39 AM

Customer poaching is a real concern and constant problem that can wreck a small service business.

Some reasonable restrictions might be enforceable, like no working for existing customers for a year or something. It varies from state to state, each state’s statutes and case law.

Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown

February 27, 2018, 08:45 AM

horsedoc

Unfortunately I have some personal experience in this, although it was in Texas. I am not an attorney but a Veterinarian who was sued for his non-compete when I was forced out by previous partners.

An attorney is critical in this matter because of the differences in statutes from state to state. I knew my departure was coming so my attorney was able to guide me as to how it should happen such that we would have the best chances.

Luckily in Texas a non-compete must include "just" compensation. The key word being just. Fortunately my ex-partners thought that just compensation was some token amount like $100. In fact, ones that hold up here in the medical professions are in the Thousands of dollars per year of the agreement. It was a pain but I succeeded.

I was just a dumb new graduate when I signed the agreement and would not sign one again even though I got out of that one. As a practice owner I have not had a single associate sign one, and never will.

And by the way the change of address deal I ran by my attorney at the time. His response was do you really think judges and juries aren't smart enough to see through that.

Of course what many legal matters boil down to is what a judge or jury thinks, if it gets that far. Will they feel like she stole the other businesses clients?

Bear in mind all my experience was 20 years ago in Texas, but often these things are not as cut and dried as they seem.

Tommy

February 27, 2018, 09:15 AM

Mr.9mm

Although not an attorney, I have been a PI in South Carolina for the last 30 years. I wouldn't say non-competes are unenforceable, as I have helped put someone in jail for contempt of court for failing to comply with a non-compete; however, he left his former employer with a copy of their client list in hand and began calling on them, under-cutting prices, etc.

The fact that she's not actively poaching clients from her previous employer works in her favor.

I would strongly urge you to seek legal advice.

February 27, 2018, 09:33 AM

Southflorida-law

There is not real "answer" to this because non-competes are very "local". Fed courts will uphold them to a certain extent but will limit them and many states and Fed put the burden on the party trying to enforce them to prove that they are not overly burdensome, economically, on the other party.

For instance, FL is very pro non-compete but NY is completely opposite and will not even enforce a FL non-compete in their state.