Do Your Non-Competition Agreements Prevent Competition?

On Behalf of | Jun 7, 2015 | Business And Commercial Litigation, Corporate Law

By all accounts, North Carolina has largely emerged from the Great Recession. In fact, according to the NC Department of Commerce, as of February, 2015, North Carolina’s unemployment rate had dropped to 5.3%–one of the lowest rates since the Great Recession began in 2008.

As hiring improves, however, many clients are increasingly concerned with protecting their investment in their businesses, and ensuring that the employees they hire today do not become the competition of tomorrow. North Carolina law has long recognized that a non-competition agreement, when properly written, can be used to protect businesses from unfair competition from former employees.

Unfortunately, however, NC law is also very clear that a non-competition agreement must meet certain requirements in order to be enforceable. And, under NC’s “blue-pencil” rule, a non-competition agreement which does not meet these requirements will be struck, in its entirety, by the Court. As a result, despite their best intentions, employers sometimes find themselves competing with their former employees–employees that they trained!

North Carolina law is very clear that, in order to be enforceable, non-competition agreements must be reasonable as to time and territory and necessary to protect a legitimate business interest of the employer. Additionally, North Carolina courts have held that a non-competition agreement must be supported by consideration like a raise, a bonus, a promotion or a job offer.

If your company has employees bound by non-competition agreements, take a moment to review them. If you are considering adding a non-competition provision to your employment policies, contact the experienced business attorneys at Richard L. Robertson and Associates, P.A., before you do. The investment you make today will be well worth the time you spend litigating an unenforceable agreement later.