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OPERATIONS

The Legal Landscape
 

Some states are friendly to noncompetes; others aren't. Here's a rough guide.
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Unlikely to enforce: California bans nearly all employee noncompetes; a company can be sued for forcing employees to sign one. Georgia's and Wisconsin's laws are nearly as strict--if a single item in an agreement is overbroad, the whole thing gets tossed. Other states in which noncompetes rarely fly include Colorado and Oregon; the latter passed restrictive legislation that went into effect January 1, 2008.

Reluctant to enforce: In most states, courts will enforce noncompetes--but only if the agreements are narrowly drafted to protect trade secrets or customer relationships. Some states allow the courts to "blue pencil" the agreement, which means scratching out an unenforceable term. Other states allow the courts to revise an agreement to make it more reasonable. "Reluctant" states include New York, Massachusetts, and Illinois.

Likely to enforce: Florida law makes noncompetes presumptively enforceable. Other states more likely to enforce noncompetes include Texas, Michigan, and New Jersey.

Last updated: Feb 1, 2008




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