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Protecting Your Business From Former Employees

Intro

In the modern business world, employee relationships don’t last like they used to.  It is imperative that business take measures to ensure that their future ex-employees cannot harm them even as early as the hiring paperwork.  One method of protection is a strong Non-Compete/Non-Solicitation Agreement; however, drafting an enforceable agreement can be tricky.

In Louisiana, there is a presumption that Non-Compete/Non-Solicitation Agreements are unenforceable.  In order to be deemed enforceable they must be carefully construed to fall within the exception that is Louisiana Revised Statute 23:921. 

Details of LA R.S. 23:921

While not expressly mentioned, non-solicitation agreements are also governed by the same set of rules laid out in LA R.S. 23:921.

An employer wishing to enter into non-competition and/or non-solicitation agreements with its employees must comply with the following requirements:

  1. The employer can only prohibit employees from working in or soliciting individuals from similar lines of business.
  2. The employer must specify the geographical area where the employee will be prohibited from working or soliciting in terms of specific parishes, municipalities, or parts thereof.
  3. The employer must either have a physical location or be actually conducting business in the identified areas.
  4. The restrictions cannot last longer than two (2) years from the time that employment is terminated.

How does this impact me?

Of further note, any forum selection clause will not be enforceable unless the employee agrees to it and again agrees once suit is brought.  These agreements need not be written or dated to be valid. These restrictions do not apply to confidentiality agreements.  Trade secrets, which include customer lists, are governed by other laws and are not limited to two years of protection.

LA courts and the statute itself provide that Non-Compete/Non-Solicitation Agreements are obligations “not to do” something and therefore a showing of irreparable harm is not necessary to obtain a preliminary injunction. Further, damages are based on loss of profits stemming from the breach of the contract not to compete or solicit.

Whether you need help drafting an effective Non-Compete Agreement or enforcing your current agreement, give the attorneys at Favret, Carriere, Cronvich a call.  We will put our experience to work for your company.