An agreement between an employer and his employee which restricts the employee from competing with the employer after he quits or is fired can be enforceable and can restrict and limit the employee’s options for work after he leaves the employer.
Basically, under New Hampshire law, employment restrictive covenants on competition are narrowly construed to protect the legitimate business interests of the employer. Two such legitimate interests to protect are the confidential information of the employer and its good will. For example, since a person in sales or technical support is in contact with the company’s customers and potential customers as part of his job, the courts would find it abundantly reasonable to restrict that employee’s ability for a limited period of time, such as a year, from soliciting or accepting business from the customers to whom he had previously sold, pitched a sales effort or provided service.
Broader restrictive covenants, which may prohibit the employee after resigning or being fired from competing in the geographical area that the company does business, may, under the appropriate circumstances, also be enforceable. Consideration would be given to issues like how narrow the industry is and whether the employer is going to be able to show to the court that the company could be subject to irreparable harm if the employee continued to work in the industry during the restrictive time period.
For an employee considering leaving a company, it would be prudent when weighing his/her options to speak with an attorney knowledgeable as to employment restrictive covenants. This could enable the employee to determine whether his planned job move may subject him to litigation and a possible court order prohibiting him from working for his new employer. If the employee is being sued or has been threatened to be sued for a breach of a restrictive covenant, there are defenses which depend greatly on (a) the facts surrounding the signing of the restrictive covenant; (b) the actual terms of the restrictive covenant; (c) the industry of the former employer and new employer; (d) the job the employee had done and would now be doing; and (e) the circumstances leading up to the employee’s termination.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].