My nonlawyer friends often assume non-compete agreements are not enforceable, usually because they had read an old headline about the Federal Trade Commission’s (FTC’s) proposed rule banning non-competes or an article suggesting that non-competes are “under attack.” Many times, my colleagues and I ultimately have to tell these folks that non-competes are enforceable, but often we can’t do so until it is too late. So, are non-competes still enforceable in Missouri?
The Short Answer Is Yes. Despite federal efforts to curtail non-compete agreements and the increased efforts at the state level to reign in non-competes, Missouri has not yet taken steps to ban or significantly impact the enforceability of non-competes. Therefore, non-compete provisions remain enforceable, provided they meet specific legal standards.
Missouri’s Legal Framework
Missouri does not have a statute governing non-competes. Instead, it is common law principles that determine whether a court will enforce the non-compete. Missouri courts will uphold a non-compete that is reasonable, meaning it is narrowly tailored in terms of time, geographic scope, and activity, and the provision protects the employer’s legitimate business interests, such as trade secrets or customer relationships.
Key Criteria for Enforceability
Missouri courts apply a reasonableness test that looks at the provision’s:
- Duration: Up to two years is generally considered reasonable.
- Geographic scope: Must be limited to the area in which the employer actually operates.
- Legitimate protectible interests: Must protect trade secrets, customer goodwill or contacts, or other confidential information.
Consideration and Timing
Missouri courts also analyze when the agreement was signed and whether consideration was provided. Agreements signed at the start of employment are easier to enforce, but in Missouri, continued employment is sufficient to satisfy the consideration requirement.
Practical Guidance
- For employers: Draft non-competes that are narrowly tailored, reasonable in duration and geographic scope, and protect your confidential information, customer relationships, or trade secrets.
- For employees: Carefully review any non-compete and seek legal advice if you are considering leaving your employment to work for a potential competitor.
Conclusion
Yes, non-competes are enforceable in Missouri. But they must be narrowly tailored, reasonable in geographic scope and duration, and protect legitimate business interests.
