The influence of ‘reasonable’ in crafting non-compete agreements

If you are an entrepreneur launching a new business in Minnesota there are a lot of issues you need to address. If the product or service you offer is unique or if you plan to leverage a proprietary way of doing things that gives you an edge, you want to protect those things.

To be sure you do the right things at the right time and in the right way it’s important to work with experienced business formation attorneys, regardless of the size of the enterprise you want to create. The due diligence required may involve a great deal, up to and including crafting employee agreements that comply with state and federal law.

If you think this is something that can be shrugged off you need look no further than recent newspaper headlines. We suspect there are many readers of this blog aware that e-commerce giant Amazon is suing Minnesota-based Target. The bone of contention is that a former vice president of Amazon operations is slated to start working for Target as its chief supply chain and logistics officer at the end of this month.

Target’s statement announcing the new hire touts that his “leadership and experience will be a tremendous asset” that will fuel business growth objectives.

Amazon’s suit says the man signed an 18-month noncompete agreement and that it needs to be enforced. The company says Target is a direct Amazon competitor and that the executive is privy to Amazon’s plans for going up against the big red bullseye .

Target says the case is without merit, but that is something for the court to decide. In the meantime, here are questions any court would likely ask to determine a noncompete agreement is enforceable.

  • Are the business reasons for the agreement reasonable?
  • Did the employee receive any clear benefit for signing the agreement?
  • Is the time limit on noncompetition reasonable?

Reasonableness is clearly important, but what that means is subject to interpretation. And so it is also clear that anyone employing a noncompete agreement needs to be sure their legal argument for it holds water.

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