North Carolina Law on Non-Compete Agreements
The lesson for employers here is clear: be very careful when drafting non-competition clauses and non-competition clauses. Don`t overdo it. Do not formulate them broadly enough to prohibit the employee from having any connection with a company that offers similar services or products, and do not try to prohibit the employee from contacting customers with whom he has never had contact. The temptation to expand these provisions is extreme, as a company wants to protect itself as much as possible, but the penalty for drafting an overly broad non-compete clause or solicitation ban is that it simply won`t be enforced and the employee will be free to go to work for a competitor. To be enforceable in North Carolina, any non-compete agreement you implement must be as follows: Employers often require their primary employees to sign non-compete obligations, commonly referred to as non-compete obligations. North Carolina law is quite strict in refusing to apply such agreements in an employer-employee context. In fact, North Carolina law requires a judge to carefully consider an employee`s non-compete terms before applying them. While the protection of customer relations and goodwill against misappropriation of funds by a departing employee is recognized as legitimate and protectable interests of the employer, the obligation not to compete with each other and to limit the employee`s future employability by others should not be broader than necessary to protect the employer`s business. A non-compete obligation that is too broad to ensure adequate protection of the employer`s legitimate business interests will not be enforced and the courts cannot rewrite such an agreement to adequately limit its scope.
Taking a quick look at the graph, you can see that most restrictions of two years or less are enforceable, while most restrictions longer than two years are unenforceable. In fact, if the two unusual cases where a ten- and seven-year restriction has been maintained are set aside as outliers, the average enforceable non-compete obligation in North Carolina is exactly twenty-four months. On the other hand, the average unenforceable obligation not to compete in North Carolina included a delay of approximately thirty-nine months. These data therefore imply that by deciding to opt for a three-year restriction instead of a two-year restriction, an employer is moving from an agreement that is usually applied to an agreement that is not applied. While there are certainly cases where contracts with restrictions of two years or less have not been applied, the data generally suggest that employers will be more successful in enforcing their non-compete obligations if they meet a two-year period. In fact, of the eight cases where a limit of two years or less was lifted, all but one26 contained territorial restrictions of at least two hundred miles27 or applied to health professionals.28 Thus, North Carolina jurisprudence strongly implies that almost any non-compete agreement with a limit of two years or less that covers non-medical business practices will be enforced as long as the territorial restriction is not excessively broad. The lesson for employees is equally clear: if you plan to work for a competitor, check your employment contract or any other document you have signed very carefully. If you have signed something that includes a non-compete agreement and/or a non-solicitation agreement, that agreement will be enforced if it is properly worded. Dans der Rechtssache VisionAIR, Inc.c. James, 167 N.C. App. 504 (2004), the non-competition agreement states that the worker “may not directly or indirectly own, manage, employ or otherwise participate in an undertaking similar to that of the employer …
in the Southeast” for two years after the end of his employment at VisionAIR. The court concluded that under this agreement, the employee would not only be prevented from performing work similar to visionair, but would also be prevented from performing completely independent work at a company similar to VisionAIR. In addition, the court found that by preventing the employee from owning even “indirectly” a similar business, for example, he may even be prohibited from holding shares in an investment fund partially invested in a company that carries on activities similar to VisionAIR. The court ruled that such huge restrictions could not be enforced. Therefore, it is important that you have a judge who is willing to do the hard work necessary and analyze every word of the non-compete obligation to determine whether the wording really protects a legitimate business interest or whether the agreement is too broad and unenforceable. If you`re worried about getting another job because of a non-compete clause, employee rights lawyer Phil Gibbons can review the deal. The law does not allow an employer to unduly restrict where you can work or what type of job you can have once you leave their company. For a free case assessment with a non-compete enforcement attorney in Charlotte, call Gibbons Leis, PLLC today at 704-612-0038.
Employers and employees should consult a lawyer when dealing with a duty not to compete or advertise. There are many published decisions on the subject, and they are not always consistent, but the Andy-Oxy case is the recent decision of the Court of Appeal, and it suggests that the Court of Appeal takes a harder line on the applicability of non-compete obligations and non-solicitations. .