Non-competition and non-solicitation agreements are both underutilized and overutilized in the business world. Underutilized because a carefully drafted agreement with the employee can often mitigate the damage if that employee leaves. Overutilized because many businesses make every employee sign such agreements regardless of whether they are necessary or legally enforceable.
When a potential non-competition/non-solicitation issue arises, the first step is to analyze the agreement with the employee, review their employment history, review the circumstances (such as what they are doing with the new employer), and analyze how similar situations have been handled in the past. The foregoing is necessary to evaluate the enforceability of the agreement, since courts analyze restrict covenants to determine if they are consistent with public policy. For example, the Court may make sure that any geographic restrictions are reasonable, whether the employee received consideration in exchange for the restriction, and whether the restriction serves a legitimate business purpose.
If an employer decides to pursue an employee for a breach of their agreement,
the first step is often to send a “cease and desist” letter first. Or the employer can proceed with the filing of a lawsuit right away. If the employer chooses to file a lawsuit, seeking an immediate Temporary Restraining Order (TRO) is often an option.
ASG Law can help businesses both enforce and defend non-competition and non-solicitation claims.