The problems companies face in enforcing restrictive covenants are almost universally limited to postemployment restrictive covenants. In the case of critically important employees, a material competitive advantage can be maintained by creating in-term restrictions and responsibilities designed to provide the company with enforceable rights. This can be done by providing an employment termination notice period, which can be — but may not necessarily be — mutual. During this notice period, the employee can be contractually restricted from competing, prohibited from discussing with customers the employee’s plans to compete and required to transition accounts. A multitude of other notice-period responsibilities can also be tied to the unique circumstances of the employee’s role with the company. If, as usually occurs, the employee gives notice late on a Friday that he or she is leaving, the company is then in a position to sue on a breach of an in-term claim versus a post-employment restrictive covenant claim. The notice provision may to that extent take the employee out of the at-will ranks. Depending on the employee value/ possibility or harm, notice can go from days to months.
Too many restrictive covenants start at the time of termination of employment (e.g., “for a period of six (6) months after termination of employment, Employee agrees…”). Companies that limit their provisions this way are leaving a valuable contract right off the table. Every contractual restriction should include in-term applicability (e.g., “during Employee’s employment and for a period of six (6) months after termination of employment…”). If the in-term language is not included, the employer is relegated to finding some common law or statutory theory to pursue claims of employee misappropriation and competition during employment, rather than the much cleaner breach of the in-term contract claim.