Noncompete Agreements and Your Business
Many business owners have heard that noncompete agreements are unenforceable. This is the case for a lot of business owners because they are using a non-compete agreement to protect their interests and it goes further than necessary to do so. While it isn’t true that a noncompete agreement is always enforceable, a poorly written one will sometimes be unenforceable. A well-written noncompete agreement drafted by an experienced attorney knowledgeable in Nebraska law has a greater chance of being upheld by the courts.
Nebraska is an “All or Nothing” state in that it will not will modify or “blue pencil” a non-compete agreement to make it enforceable. This means that if one provision of the non-compete is unenforceable, the entire agreement will be held unenforceable. “Blue pencil” states, on the other hand, will modify a non-compete to make it enforceable.
A typical noncompete agreement will have three parts: a non-competition clause, non-solicitation clause, and non-interference clause. These three provisions can prevent a former employee from opening a competitive business, soliciting your business’ customers or employees, and interfering with your existing contracts. Under Nebraska law, if any of these clauses goes further than is necessary to protect your business, the whole agreement may be held unenforceable. For the agreement to be enforceable, these restrictions must be “reasonable.” The agreement must be reasonable in terms of how far the geographic restriction extends, and for how long it extends. To determine whether the term length or geographic restrictions are reasonable, the court will look to a variety of factors including the nature of your business and whether you acted in good faith with the agreement.
Drafting a noncompete agreement is something many small business owners attempt on their own. This may save attorney’s fees initially, but the lost business from losing a key employee without a valid noncompete agreement can severely hurt their bottom line in the future. Call one of the business or employment law attorneys at Carlson & Burnett today so they can help write a noncompete agreement that will protect you and your business.