Restrictive Covenant agreements are a common tool used by employers to limit an employee’s ability to compete with the employer, solicit customers, and divulge confidential information upon termination with the company. One form of Restrictive Covenant is the non-competition agreement, more commonly referred to as “non-competes.” Generally speaking, a valid non-compete agreement provides that for a certain period of time, in a certain specified region, the employee cannot participate in a competing business.
Employers draft these agreements to protect their business from an ex-employee who may seek to compete with their prior employer. Employees often enjoy the benefits of working closely with clients and developing relationships over time that is exclusive to the company. These agreements are a way for employers to protect their own interests, but which also place a burden on the employee in the process.
New Hampshire courts typically disfavor non-competes as a restraint on trade but do enforce non-competes that are found to be “reasonable.” To determine the reasonableness of a non-compete agreement, courts apply the following three part test: 1) is the non-compete necessary to protect the employer’s legitimate business interests; 2) does the non-compete impose undue hardship on the employee; and 3) does the non-compete harm the public interest.
The analysis as to whether or not a certain non-compete will be held valid entirely depends on the facts of the case involving the non-compete. A non-compete agreement for a sales associate who works solely in one market will be more narrowly tailored than a sales associate who has a regional or nation-wide reach. New Hampshire courts will look to the specific geographic range in which you work, compare this region to your non-compete range, and will further look at the specified time period ‘not-to-compete’ to determine the reasonableness of the restrictions.
A recently enacted statute in New Hampshire now requires the employer to provide a copy of the non-compete agreement to a potential employee prior to acceptance of the offer of employment. The failure to present the prospective employee with a proposed non-compete agreement may result in a court declaring the non-compete agreement is void and unenforceable.
While non-compete agreements are not openly embraced by New Hampshire courts, they will still find these agreements valid as long as they are reasonable and presented to the prospective employee prior to accepting an offer of employment. Due to the case-by-case nature of non-compete agreements in New Hampshire, it is advisable that you consult with legal counsel to ensure you do not violate your non-compete agreement or applicable laws in New Hampshire, which may result in adverse action taken against you in court.
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By: Austin M. Mikolaities, Esq.