Non-Competes: Get More by Asking for Less

A properly drafted non-compete agreement is a beautiful thing. Sadly, a large percentage of non-competes die on the drafting table. These deaths are preventable.

Non-competes work best when employees and their lawyers believe they would be upheld by the courts.  The goal is to have the employee’s lawyer tell him, “Meh, this would probably be upheld. Keep your nose clean or get out your checkbook.”

Too often, companies craft insanely broad non-competes that employees’ attorneys use only to dry the tears of laughter that stream down their faces when they read the company’s cease and desist nasty-gram.  That is not the desired effect.

When an overly broad non-compete is violated, the company must decide whether to spend money litigating an agreement that the court may not enforce. If the company sues and loses!?! Oy. That is like handing an engraved invitation to the company’s other employees saying, “We request the pleasure of your competition. Oh, and please kick us on your way out.”

Non-competes are generally upheld in Maryland if they are no broader than necessary to protect a legitimate business interest, are not unduly burdensome on the employee, and are not designed merely to keep an efficient competitor out of the marketplace.  Whether a non-compete meets these requirements depends on the facts and circumstances of every case and the precise words used to craft the restrictions. This is not a place where general broad-brush drafting is your friend.

My cardinal rule when drafting non-competes is “Thou Shall Not Overreach.” Overreaching reduces the likelihood of enforceability under the law and reduces a jury’s desire to enforce an agreement that is in the gray area. Most jurors are employees. No one likes the kid in the sandbox who demands that ALL of the toys are his — even when they technically are.

Drafting a reasonable non-compete is not altruism.  Companies usually get more protection out of asking for reasonable restrictions. When companies overreach, they can end up with zero protection if the courts refuse to enforce the agreement.  Your company can get more by asking for less.

If you use non-competes to protect your business, avoid overreaching and seek legal advice from a competent employment lawyer with good drafting skills.