Monthly Archives: October 2008

Non-Compete Basics: Reasonable in Time

One of the criteria for enforcing non-compete agreements is that it must be “reasonable in time.” This element of enforceability is the easiest one to predict: A three (3) year employment noncompete is reasonable (almost) all the time; Four (4) year is enforceable sometimes; five (5) years rarely enforced. My research suggests this is generally true over most jurisdictions.

However, even here, there is room here for attack: Does modern pace of commerce speed up time? Is there such a thing as “internet time”? So for example, is it reasonable to keep a web browser designer sidelined for four years? Constantly evolving technologies, increased communications, and markets that never sleep could be a game changer. Why should the same general rule apply to different markets?

And, what about older employees? Is it fair to enforce a 3 year non-compete 5 years from retirement? Is time relative to the age and/or career point of the employee? It is possible that disparities in education may provide sufficient basis to make longer non-competes more onerous on lesser educated workers? Possible. Reasonableness is relative.

I must confess: I have not used these arguments. My goal is usually to get the quickest up and down vote on enforceability. Quick means no questions of fact, and so, when my case has particularly strong arguments (which is usually the case) a more focused attack can be beneficial. Reasonable in Time has not provoked as much fertile case law as the other factors of enforceability; novel arguments can be perceived as a weakness of alternative arguments.

In cases in which credibility is at issue, novel arguments can draw down a lawyer’s credibility “account balance” in a given case. However, in the right case, I think the current economic conditions are the start of good arguments that a three (3) years non-compete is NOT always reasonable, and the logic may lead to a shift in what is considered reasonable in modern time.

Non-Compete Basics: Employment vs. Sale of a Business

Courts do consider non-competes in the context of the sale of a business differently than those which arise out of an employment relationship. And, notions of fairness flip depending on the context. Someone selling a business and immediately starting a competing business is different than someone leaving a job (involuntary or otherwise). For the most part, this blog will be focused on non-competes which are employment related.