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Employers often rely upon restrictive covenants, non-competition and non-solicitation clauses, and confidentiality clauses in employment contracts (collectively “restrictive covenants”) to protect their confidential business information and hard-earned client information. A common mistake made by employers is to use “off the shelf” restrictive covenants, or to seek to protect themselves with very broad definitions on what information an employee can use post-employment. However, in most jurisdictions, to be enforceable a restrictive covenant must be narrowly tailored to match the interest it is seeking to protect. To an ongoing business, defining and protecting what it deems confidential business information and intellectual property seems a basic right. However, most courts view restrictive covenants as restraints of trade and will only enforce restrictive covenants which are narrowly tailored to protect what the court deems a business’s truly protectable interests. Further, despite contract language requesting “judicial modification” of “overbroad” provisions, courts may refuse to substitute reasonable restrictions if they find the restrictive covenant’s deficiencies too great to permit modification, rendering the complete agreement unenforceable.
Your jurisdiction will have determined, for instance, what it considers reasonable limits on industry and geographic markets prohibitions, and the reasonable temporal limits for such prohibitions. Further, what clients or prospective clients may be included in a non-solicitation covenant may be construed differently by a court than what your company might assume. Consult an attorney at an Ally Law member firm to review your restrictive covenants for each jurisdiction or country in which your company does business to assure they comport with the current state of the law in each place you might seek enforcement of such contracts. Even slight modifications to restrictive covenants may make the difference between ensuring enforcement of your business rights versus loss of control of your business information after an employee has left your company. Ally Law member firms around the globe have attorneys experienced in all aspects of employment, contract, and intellectual property law for any jurisdiction in which your company has a presence. For more information about our services in this area, contact us at yourally@ally-law.com.
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By Much Shelist.
