In our practice we review a lot of noncompetes. Some takeaways: Many are difficult to understand, confuse employees rather than enlighten them and read as if they were written in the 1970s. It’s time to infuse new life into the hows and whys of writing noncompetes. Here are six suggestions.
1. Ask if one is needed. Don’t jump to a conclusion that the answer is “yes.” Overreaching is bad strategy. Look at the controversy surrounding Jimmy John’s sandwich chain. The company reportedly requires a two year noncompete from the employees who make the sandwiches. The scope? They can’t go to work for any company that derives 10 percent or more of its revenues from selling sandwiches. There is no consideration under Texas law and thus they would be unenforceable here. (How a sandwich is made can be easily reversed engineered.) But just as importantly, when a court learns that every employee is under a noncompete, it begins to wonder whether the company’s other noncompetes—for those further up the hierarchy—are overbroad as well. Remember: Noncompetes are meant to be like lasers, designed for specific situations, not like a nuclear warhead, taking out everything in its radius. Don’t overreach.
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