A recent New York Times article highlighted an increasing trend in the areas of antitrust, competition, and employment law: the enforcement of covenants not to compete in decidedly atypical fields. Steven Greenhouse, “Noncompete Clauses Increasingly Pop Up in Array of Jobs,” N.Y. Times, June 8, 2014. For years, covenants not to compete have been used to protect the legitimate business interests of big business and in the areas of science and technology, but the past few years have seen an expansion from these traditional uses to use in employment contracts in everyday jobs, such as the work of hairdressers and camp counselors.

The Varied Enforceability from State to State

Most states treat non-competes differently, making it difficult to determine how standard form language may be viewed in multiple jurisdictions. A few states, including California and North Dakota, have statutes that restrict courts to enforcing non-compete clauses only in very limited circumstances. See Cal. Bus. & Prof. Code §§ 16600–16607 (with limited exceptions, “every contract by which anyone is restrained from engaging in a lawful possession, trade, or business of any kind is to that extent void”); N.D. Cent. Code § 9-08-06 (West 2014). On the opposite end of the spectrum, courts in states like Texas are more liberal in their enforcement of non-compete clauses, after a determination that such clauses are reasonable. See Tex. Bus. & Comm. Code § 15.50(a); Guy Carpenter & Co. v. Provenzale, 334 F.3d 459, 465 (5th Cir. 2003) (a covenant not to compete is enforceable if it is “ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable”).

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