Potential Tort Liability for Attempting to Enforce an Unenforceable Restrictive Covenant


Employment lawyers confront these facts time and time again. The situation is this ? a lawyer receives a telephone call from a client who wants to enforce a restrictive covenant. Time is of the essence, and the client wants counsel to send a cease and desist letter to the new employer. In reviewing the restrictive covenant and learning about the underlying facts, the lawyer determines that an argument could be made either way that the covenant does or does not prohibit the former employee?s work for his new employer. Or, perhaps, the former employee has gone to work for a competitor and the client suspects that the employee is breaching his or her obligations under a restrictive covenant but lacks proof that there has been a breach; however, the failure to take action if a breach is ongoing would cause significant harm. In either event, a court could rule against the former employer for one of the many reasons that courts refuse to enforce restrictive covenant agreements. Perhaps the covenant might be deemed to be too broad in geographic scope, or perhaps it extends for too long a period of time, or perhaps the covenant is written more broadly than is necessary to protect the legitimate interests of the employer, or maybe it is unclear whether the new employer fits within the restrictive covenant?s definition of a ?competitor.?

Attorneys frequently respond to this situation by sending a letter to the former employee and his or her new employer, demanding that the new employer terminate its relationship with the former employee, with the expectation that a court ultimately would resolve any dispute over the enforceability of the restrictive covenant. This tactic, however, can create unexpected liability for the client (and perhaps the attorney).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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