Your employer, or a possible new employer wants you to sign a non-compete agreement. It will effectively prohibit you from working for a period of time if your employment ends for any reason. And, the employer is not offering to pay you any extra money to sign the agreement. Will the employer enforce the agreement against you? Can the employer enforce the agreement against you? As an employment discrimination lawyer, I frequently confront this issue. You should assume that the employer will seek to enforce the agreement against you. After all, that is why they are going through the trouble of having you sign a non-compete agreement in the first place. But, is it actually enforceable? Maybe.
Generally speaking, under Michigan law, a non-compete agreement will be enforced if it protects an employer’s reasonable competitive business interests, and if it is reasonable as to its duration, geographic area and the type of employment or line of business to which it applies. Courts sometimes enforce non-compete agreements lasting as long as two years, and sometimes more. Sometimes, courts prohibit the employee from working in an entire industry, and sometimes prohibit the employee from engaging in the prohibited work anywhere in the state (and sometimes the entire country). The employee is left to suffer the financial disaster of having the agreement enforced.
Other times, courts deem such restrictions to be unreasonable, and refuse to enforce the non-compete agreement. But, even if a court deems one or more of the restrictions to be unreasonable, it does not have to throw out the agreement and allow you to work where you want. Rather, the court can modify the restriction to make it reasonable, and then enforce the modified version against you, even if it causes you financial hardship or ruin. What is “reasonable” in terms of duration, geographic area and the type of employment or line of business will depend on the particular circumstances of the case, and let’s face it — on the judge who is randomly assigned to your case. As a result, there is no hard and fast answer to the question of whether such an agreement will be enforced by the court.
This is why trying to get out from under a non-compete agreement is far more expensive on the back-end, than it is to deal with it on the front end before you sign it. You should consult with an employment discrimination lawyer prior to signing any non-compete agreement. Oftentimes, negotiation with the employer can result in you not having to enter into the agreement, or an agreement that you ultimately could live with when — not if — your relationship with that employer eventually ends.
We hope you found this update helpful. Please do not hesitate to contact us should you have any questions.