Chralotte Non-Competition / Non-Solicitation / Trade Secrets Lawyer
Non-competition and non-solicitation agreements, as a general matter, restrict an employee from working for a competitor of, or soliciting the employees or customers of, their former employer for a period of time after their employment ends. The proponents of non-competition and non-solicitation agreements argue that they help keep markets and industries fair by restricting companies from stealing each other’s employees solely to obtain the confidential information of their competitors. They also argue that these clauses are especially important to small and medium sized businesses, who are susceptible to poaching by larger competitors, or in industries that derive a substantial portion of their revenue form their trade secret and other proprietary information (e.g., software companies).
Detractors of non-competition and non-solicitation clauses argue that the clauses prohibit employees from earning a livelihood and prohibit employees from pursuing higher paying jobs. While the clauses usually limit the employee from working for a employer’s competitor, an employee who spends years in a given field or industry is most qualified for employment in that same field or industry and, as a result, may wind up working for a competitor. Therefore, the existence of a non-competition clause could severely limit the available employment opportunities of a departing employee.
While North Carolina Courts will uphold non-competition agreements that protect legitimate business interests, they will not uphold those that impose unreasonable restrictions. North Carolina law supports an individual’s right to earn a livelihood and will therefore not enforce non-competition agreements unless the restriction protects a substantial and legitimate interest of the former employer.
In determining whether non-competition and non-solicitation agreements are valid, North Carolina Courts will typically look to the time period an employee is restricted, the nature of the restriction, and the extent of the geographic restriction. Restrictive covenants that restrict an employee of a long duration, restrict the employee from performing any type of work for a competitor, and restrict the employee from working in a wide geographic area, are likely to be found unenforceable.
In contrast, non-competition claims are more likely to succeed where an employer can show that the employee had access to its trade secrets or proprietary information. A trade secret is confidential information that is not generally known or easily ascertainable, except through membership with or employment in a company. A confidential process, formula, or algorithm, are examples of things that can qualify as trade secrets. When a departing employee has had access to an employer’s trade secret information, this can be a significant factor a court will look at to determine whether to enforce a non-competition agreement.
Non-competition and non-solicitation agreements are among the most contentious and hotly contested cases between an employer and employee. We have successfully litigated a substantial number of non-competition and non-solicitation cases, including cases involving high level executives and extremely valuable confidential information. If you find yourself in need of an attorney experienced in litigating non-competition or non-solicitation cases, we encourage you to contact us.