How to Enforce a Non-Compete Contract

There are several elements that must be satisfied for a covenant not-to-compete clause to be valid. These elements are set out in the Section 1. Once the elements are met, there are several additional steps to take to enforce the non compete contract. These steps are set out in Section 2.

Instructions

Difficulty: Moderate

Elements of a Covenant Not-to-Compete Clause

1. Determine whether the contract with the covenant not-to-compete clause is in writing or was merely a spoken contract.
2. Find the contract and make sure the contract is an employment contract. Once you have determined that the contract is an employment contract, find the non compete language. If it is contained within the same writing as the employment contract, it is part of the contract. If there is an "addendum" that includes the non compete language, then the covenant not-to-compete is a part of an employment contract.
3. Determine why the covenant not-to-compete was made and whether the non compete clause was based on valuable consideration. This means that the employee was given something in return for giving up her right to compete. Ask yourself whether the employee got any benefit out of the non compete clause.
4. Research whether the non compete clause was reasonable as to time and territory. A reasonable time would usually be under two years. The territory would be reasonable for the industry. For example, it is not reasonable to enforce a covenant not-to-compete against a physician looking for similar work in another state.
5. Answer whether the covenant is fair to the parties. Fairness is a legal term defined by court cases within the particular state. Look up fairness and covenant not-to-compete clauses in your state. Read the case and get the definition set forth by the court. Use court cases decided by the state's highest court.
6. Determine that the covenant not-to-complete clause is not against public policy. Common issues that are against public policy are issues that deny the public a benefit for the gain of one. Denying a physician to work in the area as the only pediatrician in a 100 miles may be against public policy since it denies children a doctor that specializes in their care.

Enforcing a Good Covenant Not-to-Compete Clause

7. Contact an employment law attorney and ask for advice. Most covenant not-to- compete clauses are difficult to enforce and can be undermined in minor ways. Ask for the best course of action before moving on to the following steps.
8. Call the employee and inform her that she has a contract that dictates that she will not compete. Explain the legal and monetary repercussions to continuing to compete.
9. Enlist a mediator. Hire a mediator to mediate the dispute. A mediator is a non binding third party who helps the parties work out an amicable agreement. People are more willing to work on honoring a contract if they fully understand the contract and understand the motives behind the contract. Bring this all out during the mediation. If an agreement is achieved, great. If an agreement is not achieved move on to Step 4.
10. Get an injunction. Injunctions are given by the court and place restraints on employees that break covenant not-to-compete clauses.

Tips & Warnings

• Covenant not-to-compete clauses are governed by state law and therefore there is no way to explain the details without explaining them in 50 different ways for each state. Therefore, the following steps are neither legal advice or exhaustive. Consult an attorney for complete details.