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“I‘m in Competition with Myself and Losing.” – Roger Waters

Agreements restricting employees’ ability to compete against their employers are commonplace in the American workplace.  They serve as an effective means by which employers can protect their legitimate business interests in, among other things, their customer relationships, their trade secrets and intellectual property as well as their investment in the training and education they often provide employees. 

In most states, courts will enforce a restrictive covenant which is narrowly drafted to protect the employer’s legitimate business interests.  However, non-compete agreements have come under attack recently.  In New York, a legal news publisher recently settled litigation with the New York Attorney General by agreeing not to enforce non-compete agreements with reporters and certain other editorial employees (the argument being that the employer could have no legitimate business interest to protect by enforcing restrictive covenants against employees in those positions).  In Florida, an appellate court recently held that referral sources are not business interests which can be protected with a non-compete agreement.  Several states have enacted legislation restricting the enforceable scope of non-compete agreements including Hawaii (banning the agreements in technology jobs), New Mexico (banning restrictive covenants in health care jobs), Oregon (imposing an 18 month limitation on non-compete agreements) and Utah (limiting restrictive covenants to one year in duration). 

In May, the White House issued an analysis of non-compete agreements which, while acknowledging the usefulness of non-competes, focused on the adverse impact these restrictions have on employees and potentially on the economy. 

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