Wednesday, March 07, 2007

Non-Competes Are Only Enforceable if Directed at a Legally Protected Interest

Not all employees can be covered by non-compete agreements. For example, if you are an administrator with little contact with customers or your employer's secrets, a court is unlikely to enforce any non-compete you signed. Non-compete agreements generally can only be enforced if directed at a legally protectable interest. Maryland Courts have found there to be a only a few (perhaps only two) legally protectable interests. Foremost among those interests are an employer's relationship with its customers and an employer's trade secrets.

No access to customers or secrets = no non-compete.

The Maryland Court of Appeals summarized the concept of what is a protectable interest forty years ago in Silver v. Goldberger. The concepts stands to this day. The Court stated:
There is a line of cases which holds that restraint is justified if a part of the compensated services of the former employee consisted in the creation of the good will of customers and clients which is likely to follow the person of the former employee. And there is another line of cases which holds that restraint is not justified if the harm caused by service to another consists merely in the fact that the former employee becomes a more efficient competitor just as the former employer did through having a competent and efficient employee.

No comments: