Companies, both big and small, are laying off and firing employees at an unprecedented rate. Many of those employees, from the mail room on up to management, have signed non-compete agreements. It is challenging enough for companies to monitor and enforce these non-compete agreements during normal business operations. In this climate of turmoil, companies need to be proactive with their non-compete enforcement programs as employees are laid off or terminated.
Like most states, Michigan has enacted a statute regarding the enforcement of non-compete agreements. A Michigan trial court judge will typically review the particulars of each employment situation in determining the proper scope of a non-compete agreement regarding geography, market limitations, duration, and other factors. In a down economy, it is expected that Michigan courts will become more circumspect about enforcement.
In order to protect their confidential and proprietary information, including the most sensitive trade secrets, companies need to implement a program for reviewing non-compete issues prior to terminating an employee, and working directly with that employee to make them aware of the non-compete provisions. Our non-compete attorneys are also recommending that companies consider limiting the scope and reach of their non-compete agreements with employees as part of the exit interview. The practical difficulties of monitoring the large number of employees who are being laid off, and then sending threat letters to any employee who violates the non-compete agreement, simply doesn't work in the current environment. Companies need to help their employees, especially high level management, play by the rules on the way out the door.
If you are a company who is considering the termination of employees over the next 12 months, you should consult an attorney who specializes in non-compete issues to discuss an overall strategy focused on limiting the number of non-compete enforcement or litigation issues which will arise as employees seek other jobs.
Enrico Schaefer is a seasoned trial attorney and partner of Traverse Legal, PLC, a law firm specializing in complex litigation, class actions and mass tort. He has numerous multi-million dollar settlements and verdicts to his credit. You can find out more about non-compete agreements at Traverse Legal, PLC, Traverse Legal Intellectual Law Specialists.
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