By Brian J. Hunt, CPA, JD
The question on the lips of every entrepreneur faced with a restrictive employment covenant.
You’ve been planning for quite some time. You’ve formulated your business plan, chosen your organizational form and made preliminary personnel decisions. You’re prepared to start your own business. You suspect your employer won’t be pleased, but does he/she have the right to stop you?
Whether in technology, manufacturing or service, an entrepreneur must consider whether his or her new business will violate a restrictive employment covenant - a document employers are using with increasingly frequency.
This document most often takes the form of a covenant not to compete and typically includes terms designed to prevent the individual from working in a particular industry or a particular geographic area for a specified period of time. The entrepreneur bound by such a covenant must consider whether its terms will impair his/her ability to pursue the new business.
