Most non-competition agreements between employers and employees involve executives, technical personnel or salespersons with a particular ability to harm the company if they immediately go to work for a competitor. On Tuesday, the North Carolina Court of Appeals invalidated a non-compete in place with general laborers after it was deemed to have no purpose other than to prevent competition in the marketplace.

Phelps Staffing, LLC v. Phelps involved a dispute between two temporary staffing agencies. The plaintiff accused the defendant of recruiting temporary laborers it had placed with a client, inducing them to switch their employment to the defendant. Based on past solicitations, the plaintiff had placed these workers under non-competes that prohibited them from working at their current assignment for another temporary agency for one year after departing employment with the plaintiff.

The Court of Appeals concluded that the arrangement violated North Carolina public policy. The court did not analyze the duration of the non-compete or its territory. Instead, the court said that it was unenforceable as a matter of law, because its only purpose was to keep a competitor from hiring away its employees. Given the fact that the employees who signed the non-compete were general laborers, there were no trade secrets or proprietary information in their possession that could have allowed them to unfairly compete with the employer.

Absent access to such confidential information, employers have a difficult time legally justifying non-competes. In most cases, attempting to use such agreements with low level employees merely to keep them away from providing services for competitors is not deemed a legitimate protectable business interest.