We assist clients in drafting and analyzing the non-compete clause and noncompete agreements. Generally, every situation is unique between the employee and employer. Drafting an enforceable non-compete, or analyzing the viability of an existing noncompete is essential — especially considering how much is at stake — either protecting the employer’s business, or allowing the employee to continue employment elsewhere. Don’t wait for litigation, review your noncompete clause and noncompete agreements before there is an issue.
In North Carolina, a restrictive covenant is valid and enforceable if it is:
- in writing entered into at the time and as a part of the original contract of employment
- based on a valuable consideration
- reasonable both as to the time and territory
- designed to protect a legitimate business interest of the employer
- not against public policy.
Because this is a balancing test, the analysis of whether the agreement is enforceable will vary case by case. A long time period may be enforceable where the geographic scope is very limited, and the definition of competition is very limited (and vice versa).
In determining whether restrictions on competition are reasonable, North Carolina courts balance the following factors:
- the area, or scope, of the restriction the area assigned to employee
- the area in which the employee actually worked or was subject to work
- the area in which the employer operated
- the nature of the business involved
- the nature of the employee’s duty and his knowledge of the employer’s business operation.
If the noncompetition agreement for an employee is found by a court to be enforceable, the employer may successfully prevent the employee from working in their industry for a reasonable time. If the agreement is unenforceable, the employer may be left with little to no protection from the employee aggressively competing with the business.
If you have any questions about your noncompete agreements, please contact North Raleigh Law to arrange a consultation.