Recently, a restaurant made headlines for something other than its food. A restaurant employee leaked a version of the store's non-compete agreement and the document raised some eyebrows. Specifically, the leaked document provided that employees would not work at any restaurants within three miles of a store if the other restaurant "derives more than 10% of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches.: Although there was no discussion about whether the store ever tried to enforce the non-compete agreement, it does raise some interesting questions for employers to consider when it comes to restrictive covenants like a non-compete.
The first question is most likely whether the agreement is enforceable. Like most legal questions, the answer is "it depends". In order to reach a more definitive answer there are a number of questions to ask. In what state was the store located? In what state is the dispute arising? Was it a delivery driver, food preparation staff, hostess, waitress, or store manager that signed the agreement? The answers to these types of questions can make a big difference and can determine whether the agreement is enforceable.
Another common question related to a non-compete agreement is why? Employees who are asked to sign non-compete agreements frequenly ask employers why such an agreement is necessary. A court considering enforcement of a non-compete is likely to wonder the same thing. While employer responses may vary, typcially the goal is to protect confidential information, trade secrets, customer lists, etc. The application of the non-compete to the types of concerns can vary dramatically depending on the employee and the specific position. Employers should think carefully about whether a non-compete meets the goals and objectives. There are other less restrictive covenants that might be more enforceable that will do the trick. The key thing for an employer using or considering the use of a non-compete is to be thoughtful in how the agreement is drafted. This is one area where a one-size fits all form is not going to be effective. Each state has a differing view on the enforceability of non-compete agreements and each employer-employee relationship generates different workplace concerns. A deliberate and careful analysis is the key to preparing the right types of restrictive covenants to ensure the greatest chance of a court enforcing them someday.