Non-Competes in a Multi-State Environment

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Many companies have employees located in states across the country. Drafting restrictive covenants for employees in all of these locations can be a daunting task. To minimize the burden, some employers opt for a one-size-fits-all approach - that is, every employee across the country signs the exact same agreement. Depending upon the locations of these employees and the interests sought to be protected by the employer, this approach may work out. But just as commonly, it may not. This does not mean that employers need to draft fifty different agreements for use in all fifty states. Here’s a quick sketch alternative to the one-size-fits-all approach:

1. Categorize Locations – Although the law governing restrictive covenants varies from state to state, most states can generally be placed into one of three categories:

(a) states where courts are empowered to modify, sever, or blue pencil overbroad agreements - The vast majority of states fall into this category. For example, if you have employees located in Pennsylvania and Ohio, the law is substantially similar, and to the extent it varies, the courts in each state are empowered to modify contractual provisions they deem to be unenforceable. Consequently, employers might consider using one form of agreement for employees located in the states that fit within this category.

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