In Michigan, employer may obtain from an employee an agreement that
protects the employer's reasonable competitive business interests and expressly prohibits an employee from engaging in
employment or a line of business after termination of employment if the agreement is reasonable as to its duration, geographic
area, and the type of employment or line of business. Litigation seeking to remedy a breach of a non-compete or non-solicitation
agreement is very common. Is there a standard non-compete agreement?
No. While it is not uncommon for an employer to have a non-compete or non-solicitation agreement that covers the first
6 months, or one-year after termination of employment, or a 50-mile or 100-mile radius from the employee's assigned office,
what may be a reasonable duration or geographic area for one company in a certain industry, may be entirely unreasonable for
another company in a different industry.
Are non-compete agreements
difficult to enforce? No, and yes. A breach of a non-compete agreement case is no different than any other breach
of contract lawsuit. If the former employee's signature is on the written agreement, and the agreement complies
with the "reasonableness" requirements, the evidence of the former employee's breach and damages caused by the
breach is typically easy to develop. In addition to recovering money damages from the former employee, the former employee
is forced to spend tens of thousands of dollars defending against the lawsuit. Getting a preliminary injunction issued,
however, is difficult. If your definition of "enforcement" means being able to immediately force the former-employee
to stop working for his new, competing employer, then enforcement may be difficult.
Can the execution of a non-compete or non-solicitation agreement be made a condition of employment or the continuation
of employment? Yes. In fact, there is Michigan case law that says that no additional consideration (beyond continued
employment) must be exchanged to support the enforceability of a non-compete agreement.
What can an employee do if he or she is told that they must sign a non-compete agreement in order to keep their job?
They can object to unreasonable restrictions, and attempt to negotiate restrictions that are reasonable. A resourceful
employee who can illustrate the unreasonableness of the restrictions, and also propose reasonable alternate terms and restrictions,
may very well gain agreement on their proposed revisions, and may also put herself in position where she is legally protected
from a retaliatory termination. On the other hand, a prospective employee can be turned down, and an existing employee can
be terminated, for refusing to sign a reasonable non-compete agreement.