Case Law on Non-Compete Agreements

Case Law on Non-Compete Agreements

Non-compete agreements are becoming increasingly common in today`s workplace. These agreements are typically signed by employees as a condition of their employment and prohibit them from working for a competitor or starting a competing business for a specified period of time after leaving their current employer. However, the enforceability of such agreements can vary depending on the jurisdiction and the specific terms of the agreement. Below are some notable cases that have shaped the case law on non-compete agreements.

1. All Stainless, Inc. v. Colby (1995) – In this case, the court found that a non-compete agreement was unenforceable because it was too broad in scope. The agreement prohibited the employee from engaging in any business similar to that of the employer anywhere in the world, without any regard for the type of business or the location of the activity.

2. Kemper Sports Management, Inc. v. Graf (1999) – The court in this case upheld a non-compete agreement because it was narrowly tailored to protect the employer`s legitimate business interests. The agreement only prohibited the employee from soliciting clients that he had worked with during his employment and did not prohibit him from working in his field of expertise.

3. Doctors Associates, Inc. v. Casarotto (1996) – This case involved a famous non-compete agreement, known as the «Subway sandwich artist case». The court found that the agreement was enforceable because it was reasonable in scope, duration, and geographic area. The agreement prohibited the employee from working for any competing sandwich chain within a certain radius of a Subway restaurant.

4. AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) – In this recent case, the court found that a non-compete agreement was overly broad and unenforceable. The agreement prohibited the employee from working for any company that provided staffing services to healthcare facilities, regardless of whether the new job was in direct competition with the employer. The court found that this restriction was not necessary to protect the employer`s legitimate business interests.

These cases demonstrate that the enforceability of non-compete agreements is highly dependent on the specific terms of the agreement and the jurisdiction in which it is being enforced. Employers should carefully consider the scope and duration of non-compete agreements before requiring employees to sign them, and employees should consult with legal counsel before signing any such agreements.