Law School Discussion

contracts question

contracts question
« on: February 04, 2006, 05:47:48 PM »
Hi, an employee who was a child prodigy and expert on computer science was hired but was only responsible for taking telephone orders from customers and understanding customer's needs in websites for a year. He went to work for another company at a creative position that also researched and designed websites. Do you think a restrictive covenant restricting an employee from designing websites in NY within 15 miles for a period of 5 years is considered reasonable and should be enforced? In a website designing industry, is it a competitive market in website designing and do potential clients tend to follow an employee if they breach the covenant and work for another company?

Re: contracts question
« Reply #1 on: February 04, 2006, 06:10:08 PM »
I'm not sure your question is as well-punctuated as it would be in the best of all possible worlds, but I'll answer it insofar as I can understand it. The things to worry about when you are dealing with non-competes are duration and geographic area. These two parameters have to be reasonable, and reasonableness is to a certain degree settled within a given jurisdiction.

A non-compete is a thing that requires balancing. You want to allow parties to contract freely, to encourage productive relationships between employers and employees, etc. You also don't want to hamper the market by enforcing really draconian non-competes. (I understand that there is a perfectly plausible argument that you are not really hampering the market by enforcing contractual provisions reached in that market, at arms' length).

So plug your facts, which I don't fully understand, into what I just said, or preferably, into what your prof said. Do web designers possess unique skills/cultivate client relationships, that an employer has a legitimate interest in protecting? is 15 miles/5 years reasonable? On one hand, 5 years is almost certainly not reasonable in an industry where the state of the art changes every 5 minutes. On the other hand, if you are worried about client relationships, as opposed to unique skills, then you might tolerate a longer non-compete. Either way, 5 years just seems egregious. It's more than enough time to recover from any potentially harmful employee departure.

Re: contracts question
« Reply #2 on: February 05, 2006, 10:28:40 PM »
In my JD it is a 2 prong test.

1) Reasonable

  a. Not greater time/distance than required
  b. does not cause undue harship on employee
  c. not injurious to the public

2) legitimate Business interest

Re: contracts question
« Reply #3 on: February 06, 2006, 01:34:01 PM »
In Kansas the factors for determining the enforceability of a non-competition covenant are
1.  Protects a legitimate business interest
2.  Does not create an undue burden on the employee,
3.  Is not injurious to the public welfare
4.  Contains reasonable time and territorial restrictions.