Martin D. Haverly, Attorney at Law
302-529-0121

Relevant considerations surrounding noncompete agreements

Select workers in many Delaware businesses are intimately involved at high levels in matters concerning their employers’ policies, business plans and proprietary data. Company principals know that, while such employees are key assets to their enterprises, they can also prove detrimental if they quit their jobs absent any post-termination controls on their knowledge or ability to compete.

A worker unfettered by legal constraints might establish a directly competing business just down the road, for example, piggybacking on knowledge gained at his or her prior job. Conversely, that worker might commence employment with a business rival, imparting to that entity information/data deemed proprietary by the previous employer.

The American business realm has long recognized that threat and the related need for businesses to duly protect themselves from harmful actions certain employees might take following termination of a work relationship. Restrictive covenants used in the employment sector enable company managers to check employees’ harmful post-employment conduct.

That ability comes with a caveat, though, namely this limitation: The restrictions sought to be imposed on departed workers via contractual limitations cannot be excessive.

That is, they must be reasonable.

What that means when reasonableness is evaluated by a court in Delaware or elsewhere will vary from case to case. Some employee actions clearly affect prior employers in materially harmful ways. Others, though, might be construed as falling short of behavior that merits legal sanctions. Indeed, courts fundamentally recognize the right of American workers to be reasonably free of impingements on their freedom in the employment sphere.

We will delve a bit further into this subject matter in our next blog post, spotlighting the contours of “reasonableness” and the key role that so-called “noncompete agreements” play in the marketplace.

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Martin D. Haverly, Attorney at Law
Brandywood Plaza, 2500 Grubb Road
Suite 240-B
Wilmington, DE 19810

Phone: 302-529-0121
Fax: 302-529-1123
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