1/11/08
While noncompete agreements may serve as an essential tool for employers seeking to protect their valuable confidential information and customer relationships from misappropriation by departing employees, employers must carefully draft such agreements to ensure court enforcement. A recent Wisconsin case illustrates this point. In H&R Block Eastern Enterprises v. Swenson, the tax firm attempted to enforce noncompete agreements that precluded former employees from providing tax or bookkeeping services to any of the company's clients for two years after termination of their employment. The agreements specified that, if the employees violated the restriction, the two-year period would be "extended by any period(s) of violation." Although such extension clauses are not uncommon in noncompete agreements, the Wisconsin Court of Appeals held that the provision was unreasonable and rendered the entire agreement unenforceable.
Because the law on enforcement of noncompete agreements varies from state to state and is constantly developing, employers who rely on such agreements to protect their business are strongly encouraged to have them periodically reviewed and updated by legal counsel.
