Restrictive Covenants

Question 1

What is a restrictive covenant?

Answer 1

provision in an employment contract that restricts employee from competing, soliciting clients or disclosing confidential information AFTER leaving the employer
senior executive roles

Question 2

What are the courts position on Restrictive covenants?

Answer 2

don’t like, imbalance of power, eager to overturn
prima facie void (at first glance)

Question 3

Non compete vs non-solicit

Answer 3

non compete: courts are critical
if non-solicit is sufficient the court will make the non compete void

Question 4

What is a non-solicit?

Answer 4

can’t go after old employers clients
less extreme than a non-compete

Question 5

What are the 4 steps of a non-compete test

Answer 5

1. it protects legitimate interest of employer
2. restrain is reasonal for temporal length, spacial area, nature of activities prohibited, overall fairness
3. terms of restraint are clear and certain, no vagueness
4. Restraint is reasonable in terms of the public interests

Question 6

What is legitimate proprietary interest?

Answer 6

RC only for business employer did at time of signing
can’t limit working for a competitor in a different capacity

Question 7

What is reasonableness of spatial limits?

Answer 7

consider nature of business, position held by employee, location where employee worked

Question 8

What is the reasonableness of temporal limits?

Answer 8

cannot overreach, consider nature of buisness and job of employee, msut have known end time, usually 2-3 years, how long for employer to protect interests once employee leaves

Question 9

What is considered overall fairness?

Answer 9

is it normal for the person to improve skills under mentorship and then move on to open their own practice

Question 10

What is “clarity and certainty and no vagueness”?

Answer 10

specific area, must know if they will be violating the clause