When a noncompete clause is enforceable

Both employers and employees sometimes hold mistaken beliefs about noncompete clauses in contracts. Perhaps the most common one is that these clauses are not enforceable.

North Carolina does favor the employee if you write a noncompete clause that overly restricts him or her from getting another job. Across the country, there has been a trend toward making noncompete clauses more restrictive for the employer. Here are some ways to make it more likely your noncompete clause will hold up in court.

Make it part of the original employment agreement

Employers sometimes do not think about asking their employees to sign a noncompete agreement until after hiring them. Once you hire someone, you cannot add a noncompete clause or other significant terms in your favor without providing additional consideration. This could be additional benefits, a bonus or a raise. Simply making it a condition of continued employment will not work.

Make it for a reasonable time and geography

North Carolina law does not stipulate how long a noncompete clause can last or how broad it can be geographically. A business law attorney can guide you through the process of writing a noncompete clause which is reasonable for the length of time and for the geography you need to protect your business.

For example, if you do business only in Charlotte, North Carolina, your agreement should not cover Greensboro, Raleigh or other cities. A court might find that this agreement was unreasonable in your case. However, if your employee sold all over the state, a court might find that a state-wide agreement was reasonable.

Make it cover similar employment

You should not try to bar an employee from engaging in any kind of sales. You should write a noncompete clause that protects you from him or her engaging in sales of a competitive product.

Do not leave out a noncompete clause or write one carelessly because you assume it is not enforceable. Write a reasonable noncompete clause that can protect you if an employee goes into competition against you.