- The contract covers a reasonable length of time, geographic area, and line of business.
- The contract is in writing and signed by the person whose business activity is being limited.
- The person seeking enforcement of the contract can prove the existence of “legitimate business interests” that would justify the contract’s restrictions.
- Trade secrets. This is private information that has actual or potential economic value and is being kept secret for that reason. A trade secret could involve anything from a process to a formula to a physical product. For example, we recently noted that Coca-Cola goes to great lengths to protect its formula. Coca-Cola would therefore have a legitimate business interest in enforcing a noncompete agreement against an employee who was provided access to the secret formula.
- Valuable, confidential business or professional information that does not qualify as a trade secret. This clause excludes information that is commonly known in the industry. In other words, the information must be both unique in the industry and confidential.
- Substantial relationships with customers or prospects. If an employee had a strong relationship with a customer, the employer can prevent that employee from soliciting that customer on behalf of another company.
- Customer, patient, or client goodwill. For example, the purchaser of the assets and goodwill of a business has a legitimate business interest in preventing the seller from servicing former clients.
- Extraordinary or specialized training. This means the training you provide goes far beyond standard training in your industry.
