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Labor: 3 factors to consider when litigating covenants not to compete

Noncompete lawsuits will protect business interests, if used properly

Covenants not to compete, or “noncompetes,” are commonplace in the employment context. Although state laws affect the validity of particular restrictions, the widespread notion that courts never enforce noncompetes is misplaced. Courts frequently enforce reasonable restrictive covenants that are narrowly tailored to protect legitimate business interests. 

This is not to say, however, that an employer should rush to the courthouse whenever it believes a former employee is violating a noncompete. Employers that file noncompete-related lawsuits based on emotion, rather than a calculation of the costs and benefits of various courses of action, often find themselves deep into a lawsuit with nothing to show for it but increased legal expenses.

2.      Should the employer seek preliminary relief?

Assume that an employer has decided a lawsuit is the best course of action. The employer must decide if it will seek a temporary restraining order or temporary injunction. Possible benefits of such an action include ending competition that may be conspicuous to other current and former employees, and acting to protect the employer’s client base and/or confidential information before damage occurs that cannot be undone.

Contributing Author

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Craig Oliver

Craig Oliver is a partner with Bradley Arant Boult Cummings LLP (Nashville, Tenn.) and serves as vice-chair of the firm’s Labor and Employment Practice. His...

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