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When are non-compete agreements enforceable?

On Behalf of | Nov 10, 2020 | Firm News

Non-compete agreements have been the source of much litigation over the years. Some states have opted to prohibit these types of agreements altogether.

Kentucky still allows for the use of non-compete agreements, within reason. It’s important to understand what makes a non-compete agreement enforceable and avoid finding yourself tied up in a legal dispute.

Blanket agreements are frowned upon

Much of the legal analysis concerning non-compete agreements revolves around whether they place an undue burden on employees. It’s probably not asking too much to have an executive who has access to trade secrets sign a non-compete agreement. Having your janitorial staff do the same may be a bridge too far. It’s best to limit non-compete agreements to employees who have access to sensitive company information.

Avoid broad restrictions

A non-compete agreement that is overly broad is likely to place an undue burden on an employee. For example, a years-long global prohibition on an employee taking a job with a competitor is likely too restrictive. A non-compete that is more limited in time and geographic scope is more likely to be upheld by a court. An agreement that takes minimal steps to protect a company’s interests is generally safe.

Offer additional incentives

If an employee is asked to sign a non-compete after they’ve already begun their job, additional consideration must be provided. This could be an increase in salary, additional time off, or some other type of incentive. The Kentucky Supreme Court has held that merely offering continued employment as consideration is not enough in these types of cases.

Put it in writing

No one wants to go through a legal dispute where it’s one person’s word versus the other person’s word. Put the agreement down on paper. Both parties should sign the document. Employees should have time to have a lawyer review the document if they wish. A skilled legal professional can help with all of your non-compete needs and issues.