Screen Magazine: Vol. 28, Issue 25

Screen Magazine - Index

Screen Magazine - Screen Magazine: Vol. 28, Issue 25 - Index

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You Shouldn’t Have
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Some employers may require new employees to
enter into non-competition agreements before
beginning work. These agreements usually take
effect after the employer-employee relationship
has ended and are for the protection of the
former employer’s trade secrets, client lists or
goodwill. However, courts generally disapprove
of non-competition agreements as limitations on
a former employee’s right to earn a living.
Generally speaking, in states where they
are legal, a non-compete agreement will be
enforceable if, at a minimum, it is: 1) designed to
protect the employer’s legitimate interests; 2)
limited in geographic scope and time duration;
and 3) not contrary to the public interest.
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�� The goodwill developed by an
employer in terms of customer relations can
be a valuable asset, so an employer may use a
non-competition agreement to prevent a former
employee from capitalizing on that goodwill and
competing with the original employer. Likewise,
an employer may use a non-competition
agreement to protect its confidential information.
Generally, in order for the information to be
entitled to protection, the employer must show
that it took reasonable measures to keep the
information secret, and that the information
gives the employer a competitive advantage.
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�� Non-competition agreements
must be reasonable in duration and scope.
The reasonableness of the duration of the
agreement will depend on the specific facts of
each case. For instance, if the non-competition
agreement is designed to protect confidential
information, the duration should be no longer
than the time for which the information has
value. The geographic area covered by the
agreement must also be reasonable considering
the circumstances. Generally, courts will not
allow a non-competition agreement to prevent
an employee from working in a geographic area
where the employer does not do business.
If a court finds that a non-competition
agreement is overbroad, it may narrow the
scope and duration of the agreement and enforce
it as modified, or it may refuse to enforce
the agreement entirely if it finds that it was
clearly intended to prevent legitimate business
competition by the former employee.
Donald R. Simon is an attorney concentrating in
entertainment and intellectual property law issues. Send
questions or comments to dsimon@entertainmentlawch
icago.com. This periodic column is provided as a source
of information and is not to be construed as legal advice
or opinion, or to form an attorney-client relationship. For
legal advice, please consult an attorney.