For Your Consideration: Recent State-To-State Developments On Sufficient Consideration For Employee Non-Compete Agreements

The various laws, statutes, and policies governing non-compete agreements are nuanced, inconsistent, and sometimes downright contradictory from state-to-state. The issue of consideration is no different. Like other contracts, non-compete and restrictive covenant agreements must be supported by adequate and sufficient consideration at the time of execution. However, what constitutes adequate consideration for a restrictive covenant, especially a non-compete provision, varies from state to state. And, more importantly, the concept of adequate consideration has shifted in recent years reflecting an increasingly strict approach to enforcing non-compete agreements post-employment.

Traditionally, in most states, when a restrictive covenant is executed as part of an employment agreement at the outset of the employment relationship, the offer of initial and continued employment was generally considered adequate consideration for entering into the covenant. However, this issue