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Employment Compliance General Counsel and In House Counsel

Differing State Laws on Restrictive Covenants

Employers, Beware!

The law on restrictive covenants varies significantly from state to state, and is governed by the common law, statutes, or a combination of both. Drafting an effective and enforceable restrictive covenant is essential to protecting your interests as an employer as well as the interests of the company as a whole.

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One of the most controversial areas of employment law, the enforceability of restrictive covenants — which often take the form of noncompete agreements, non-solicitation clauses, or non-disclosure agreements — can be very difficult for employers to navigate. With the increasing mobility of the American workforce and the ease of access to sensitive information brought on by modern technology, drafting an effective and enforceable restrictive covenant is essential to protecting your interests as an employer as well as the interests of the company as a whole. According to recent research, as much as 18% of the American workforce has entered into some form of a restrictive covenant, most commonly in the form of a noncompete agreement. Because the laws vary widely from state to state, knowing the law of your jurisdiction is crucial in drafting an enforceable restrictive covenant that adequately protects your business interests.

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