Contracts are the foundation of business in America. Every valid contract requires that all parties receive consideration. When it comes to non-compete agreements, that can be a little confusing. How do employees benefit? Arguably, for one thing, employers are more likely to invest in talent they know will stick around for a while. In Michigan, non-compete agreements must meet certain standards to be enforceable.
Restrictive covenants
Non-compete agreements are a kind of restrictive covenant. Non-competes are designed, in part, to protect the trade secrets and other types of intellectual property of a company. Employees who are bound by non-compete business contracts are often barred from starting their own company, going to work for a competing firm, or soliciting existing clientele of their employer for a certain period of time after they leave.
Controversy
When it comes to non-competes, some people are opposed to the effects they have on the marketplace. For example, some believe that they stifle innovation by preventing workers from starting their own businesses. Labor advocates believe they give employers too much power compared to employees. But the fact remains, these are enforceable in Michigan in many cases.
What makes a valid non-compete?
In Michigan, a key to the enforceability of a non-compete agreement is the word reasonable. The time period must be reasonable. The geographic area covered by the agreement must be specified, and it must be judged reasonable as well. Finally, the type of business should be defined narrowly. Courts favor non-competes that are clear about what industry and specialty they apply to. Of course, all of this must be interpreted by the court.
There are times when a former employer will seek to enforce a non-compete against a former worker. What representation you have on your side matters in these situations.