Inside: Differences in state law could sink your non-competes

Many states apply a common law reasonableness standard to restrictive covenants

Differences in state laws governing restrictive covenants pose significant challenges to employers seeking to implement and enforce such covenants. Many states apply a common law reasonableness standard to restrictive covenants.

While there are some differences in how states approach this common-law standard, restrictive covenants will generally be enforced in such states if the covenants protect a legitimate interest of the employer and are reasonable in geographic scope and duration and are not harmful to the public. In contrast, California has essentially outlawed non-compete agreements. A number of other states have tried to reach a middle ground. For example, a Colorado statute voids non-compete covenants unless they relate to the sale of a business, the protection of trade secrets, the recovery of education or training expenses, or executive and management personnel. Georgia permits post-employment non-competes only with respect to certain classes of employees.

Contributing Author

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Jeffrey S. Boxer

Jeff Boxer is a partner at Carter Ledyard & Milburn LLP. Mr. Boxer is a member of the firm’s Litigation Department and Trade Secrets, Business...

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Contributing Author

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Emily Milligan

Emily Milligan is counsel at Carter Ledyard & Milburn LLP in New York. She is a commercial litigator whose practice focuses on restrictive covenants and...

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