Smart Talk: Protecting your customer list

Sunday, July 31, 2005

Q. What steps can a supplier take to create an enforceable non-compete agreement that will prevent competitors from hiring away its sales staff?
A. There are three simple things an employer can do to increase the chances of having a non-compete agreement enforced. First, an attorney who deals specifically with employment law should be used to draft a non-compete. Non-compete agreements are governed by state law. As a result, the enforceability of non-competes varies greatly from state to state. This is a highly litigated area of the law and the law changes on a regular basis. An attorney who specializes in employment law will be familiar with any recent changes and the nuances of the law and will be in the position to draft the toughest non-compete agreement that will be enforced by the courts.
Second, don't draft a non-compete that is too broad. The purpose of a non-compete agreement is to protect the legitimate business interest of the employer. Therefore, the geographic scope and time restrictions in the agreement should be reasonable and no broader than necessary to protect the legitimate business interest of the employer. An over-reaching agreement is likely to be invalidated by a court.
Finally, don't devalue your customer list and other confidential information that you are attempting to protect by not routinely enforcing your rights under a non-compete or similar agreement. Consistent enforcement will also send a message to your employees.


Denise M. Fletcher is an attorney with the Health Care Group of Brown & Fortunato, an Amarillo, Texas based law firm. She can be reached at (806) 345-6318 or