Unfair Enforcement of Covenant Not to Compete

Maryland public policy favors a person’s ability to work. But sometimes, employers require their workers to sign non-compete agreements. If these covenants not to compete do not meet certain standards, they are unenforceable, and courts will strike the offending provisions. If you believe that your non-compete agreement is being enforced unfairly, call an employment law attorney today.

Non-Compete Agreements

A non-compete agreement will generally be upheld if it is reasonable in light of the interests of the employee, the employer, and the public, and is narrowly tailored. A non-compete agreement will generally be enforceable if:

There is adequate consideration;
The covenant is reasonably necessary to protect the employer’s business interests;
It is limited in geography and duration to what is reasonably necessary to protect the employer’s business;
It imposes no undue hardship on the employee; and
Enforcement is not against the public interest.

Courts will also consider issues such as:

Whether the worker has unique skills;
Whether the employee is exploiting personal contacts with the employer’s customers;
Whether the non-compete is needed to protect the employer’s customer relationships, client lists, trade secrets, or sales routes; and
Whether enforcement would place undue hardship on the employee.

Consideration

In order for a non-compete agreement to be enforceable, there must be sufficient consideration, which means compensation for the agreement not to compete. Generally, the promise of a salary is enough consideration. If a worker is in the midst of at-will employment, then the promise of a substantial amount of continued employment can be consideration.

Protectable Business Interest

To be valid, a non-compete must protect a legitimate business interest. Generally, non-compete agreements are not enforceable if the employee lacks access to confidential business information, such as customer or client lists, trade secrets, or other proprietary information. Non-competes will also likely be enforced when an employee’s job involves creating goodwill and a client base that is likely to follow the employee. Sometimes, covenants will also be enforced when an employee has unique skills, and the employer hired the employee because of those skills and used those skills to attract customers.

Overbroad

Covenants not to compete must not be overly broad in either geographic scope or in duration. They may not prohibit the employee from doing things that are outside of the company’s geographic location or scope of the business. Non-competes must only restrict activity in places where the employee has carried out the employer’s business. Courts will consider factors including the nature of the market, the uniqueness of the business, and the scope of the prohibition.

Non-compete agreements cannot be effective for too long after employment ends, and the contract must be clear about the duration. Courts have enforced covenants with two-year restrictions.

Undue Hardship

Most lawsuits involving non-compete agreements result in injunctive relief. In some rare cases, the court may determine that, even though the covenant is legally valid, enforcement would cause undue hardship to the employee, and then decline to enforce the covenant.

Public Interest

Public policy in Maryland favors an adult’s ability to work. The non-compete clause must be sufficiently important to warrant the deprivation to the community of the skills and services of the worker.

Blue Pencil

If a court finds that a provision in a non-compete agreement is invalid, this does not mean that the entire agreement is invalid. Maryland’s blue pencil rule means that a judge may strike the overbroad provision but enforce the rest of the non-compete.

Contact an Experienced Baltimore Lawyer Today

If you believe that your employment contract is being unjustly enforced, please contact the Baltimore employment law attorneys at The Casper Firm for a free consultation.