Michigan

Michigan Businesses Should Consider Using Non-Compete Agreements to Keep Their Competitive Advantage

We've all heard the horror stories about businesses entrusting sensitive and private company information to employees, only to have those employees leave the company and use its sacred data to compete against the very company who provided it to them. This type of event can have a devastating effect on small businesses. It is important for any business that wants to keep its competitive advantage to take the appropriate steps to protect its proprietary information and trade secrets from departing employees.

Protecting a business's information when an employee leaves doesn't start when that employee leaves. Rather, it starts when the employee first hires in by requiring them to sign a non-compete agreement. Requiring employees to sign a non-compete agreement when the employee joins the company can provide a high level of protection by limiting that employee's ability to make competitive use of the company's important information after they leave the company.

But, it is important to have a competent Michigan business lawyer prepare the non-compete agreement so that it complies with Michigan law and provides the expected level of protection. Agreements that overreach in breadth and scope may be enforced on a limited basis or may be invalidated entirely.

Michigan non-compete agreements are subject to the Michigan Antitrust Reform Act and state and federal case law interpreting that statute. Under this law, in order to be enforceable, non-compete agreements must (1) be designed to protect an employer's reasonable competitive business interests; (2) have a reasonable duration; (3) have a reasonable geographic scope; and (4) prohibit competition only in a clearly defined line of business.

Properly prepared and implemented non-compete agreements can provide the basis for obtaining an injunction prohibiting an ex-employee from using a business's information against it. This remedy provides a business with a powerful remedy to protect its competitive business interests against dishonest ex-employees who would otherwise seek to unfairly compete with their former employers.

Full post as published by Michigan Business Lawyer Blog on January 23, 2008 (boomark / email).