Inside: Differences In State Law Could Sink Your Non-Competes

Differences in state laws governing restrictive covenants pose significant challenges to employers seeking to implement and enforce such covenants. Many states apply a common law reasonableness standard to restrictive covenants.

While there are some differences in how states approach this common-law standard, restrictive covenants will generally be enforced in such states if the covenants protect a legitimate interest of the employer and are reasonable in geographic scope and duration and are not harmful to the public. In contrast, California has essentially outlawed non-compete agreements. A number of other states have tried to reach a middle ground. For example, a Colorado statute voids non-compete covenants unless they relate to the sale of a business, the protection of trade secrets, the recovery of education or training expenses, or executive and management personnel. Georgia permits post-employment non-competes only with respect to certain classes of employees.