Slate's Law Blog Business Litigation and Non-Compete Clauses: Five Things to Know

When businesses hire new employees in Santa Fe, New Mexico, they often draft employment contracts that include non-compete clauses or non-compete agreements. Non-compete clauses are one type of “restrictive covenant,” or clauses or agreements that are contained in business contracts. Restrictive covenants can also exist in other areas of the law, but restrictive covenants have specific uses in a business law context. In employment contracts, restrictive covenants typically include non-compete clauses, non-disclosure agreements, and/or non-solicitation agreements. These types of restrictive covenants are some of the common reasons for business litigation involving employment contracts and employment disputes.

Below we will focus specifically on non-compete clauses, and provide you with more information about business litigation and non-compete agreements. The following are five things you should know about non-compete clauses in business litigation cases.

Non-Compete Agreements Limit an Employee’s Ability to Compete with the Employer After Leaving a Job

The purpose of a non-compete agreement or clause is to limit an employee’s ability to compete with the employer after leaving the job. For example, a non-compete provision might say that an employee cannot do the same type of work for a competitor within a 30-mile radius for at least six months after leaving the present employer. The purpose is to allow an employer to protect its business interests and to prevent an employee from taking trade secrets or other knowledge to a competitor that could harm the employer’s business.

Non-Compete Clauses can be Lawful and Enforceable in New Mexico

While some states simply do not allow non-compete clauses to be enforced, New Mexico does allow non-compete provisions to be enforced in many circumstances. However, there are limitations on non-compete clauses.

Non-Compete Provisions Must be Reasonable in Time and Geographic Area

To be enforceable, in general, a non-compete agreement must be reasonable in terms of its temporal and geographic scope. While there is no specific set time or geographic region that will always be reasonable (or, conversely, unreasonable), you might imagine what a reasonable person would consider to be acceptable to protect a business’s interests. For example, a non-compete clause that prevents an employee from working for a competitor within a 500-mile radius for 10 years would likely be unreasonable. However, a one-year restriction on working for a competitor within a 30-mile radius might be seen as reasonable depending upon the circumstances.

Non-Compete Agreements Must Come With a Form of Consideration

For a non-compete provision to be valid, it must come with some form of consideration. In other words, in agreement for not competing with the employer according to the terms of the clause, the employee must get something in return.

Some Types of Employment Cannot Involve Non-Compete Clauses Under New Mexico Law

Every state has its own set of laws governing non-compete clauses, restrictive covenants more generally, and the enforceability of employment contracts. Under New Mexico law, it is difficult and often impossible to enforce a non-compete provision in an employment contract with a health care practitioner. State lawmakers recognize that enforcing non-compete agreements for health care providers could limit a person’s access to health care, which would be against public policy. You should speak with a business litigation attorney about other potential exemptions and exceptions.

Contact a Business Litigation Lawyer in Santa Fe

If you have questions about employment litigation and non-compete agreements, an experienced Santa Fe business litigation lawyer at our firm can assist you. Contact Slate Stern Law today for more information about how we can help with your case.


Leave a Reply

Your email address will not be published. Required fields are marked *

Call (505) 814-1517 • Visit 1701 Old Pecos Trail, Santa Fe, NM 87505

Copyright © 2019 Slate Stern Law • DisclaimerSite by Patrick Iverson