Non-Compete and Non-Solicit Covenants
Restrictive covenants, also known as “non-compete” and “non-solicit” covenants, are a staple of many employment contracts. A non-compete covenant refers specifically to where one party to the contract, most often the employee, agrees not to practice in a similar profession or capacity in competition with the other party. A non-solicit covenant, on the other hand, normally refers to the employee’s restrictions on the right to solicit clientele or employees of the employer after the end of the employment relationship.
At the heart of restrictive covenants lays the principle that it would be unfair for one to use sensitive information or other insider knowledge in competition against a former employer unfairly. Such a provision usually carries some geographic or temporal limits on the prohibition, but it remains a crucial tool for employers to protect their business against unfair competition.
Restrictive covenants are notoriously hard to enforce and their legal validity may always be subject to the careful scrutiny of the courts. Many employees often enter into agreements paying little attention to enforceable restrictive covenants. Conversely, many employees needlessly abide by restrictive covenants that are unconscionable and unfair for fear that they would be sued.