In the high stakes business world, non-compete agreements are an important tool for businesses to protect their client lists, goodwill, and pricing models. Without a strong non-compete agreement, losing a key employee can be very costly. The last thing your business wants is for a former employee to gain a competitive advantage against you by using valuable information gained while under your employ. If your company is in the technology, sales, or hospitality industries (among others), then having a non-compete agreement may be valuable to you. Non-compete agreements are generally valid as long as the agreement reasonably protects the employer’s competitive business interests. Additionally, the agreement’s duration and geographical scope must be reasonable.
Michigan courts continue to enforce non-compete agreements. In a recent case decided by the Michigan Court of Appeals, Brown Dairy Equipment, Inc. v. Lesoski, the court upheld a non-compete agreement between a dairy farming supply business and one of its former sales representatives. The sales representative left the employer to work for one if its competitors. The court noted that goodwill between a business and its customers was important and that non-compete agreements allow employers to protect the value of goodwill by precluding former employees from working for a competitor in a limited market area for a limited time.
If your business is one where employees have the opportunity to take valuable and confidential information with them, you should consider using a non-compete agreement.
To download the Michigan Court of Appeals decision click here.
This article was written by Michael Hayes, a Law Clerk at Demorest Law Firm.
