Many businesses in New Mexico include restrictive covenants, which are also known as covenants not to compete, non-competition agreements, and non-compete agreements, in employment contracts or severance agreements in order to protect their business interests. There are many reasons that non-compete agreements are beneficial for businesses, but it is important to ensure that any agreements you ask employees to sign are enforceable. If an employee or former employee violates a non-competition agreement in a way that harms your business, you may be able to work with a New Mexico business litigation attorney to enforce the restrictive covenant.
Why Non-Compete Agreements are Important for Businesses
Why should you include a restrictive covenant or non-compete agreement in an employment contract when you hire a new employee or in a severance agreement when an employee leaves your company? These clauses allow employers to restrict an employee’s ability to move onto working with a competitor immediately after leaving your business and taking valuable information from your company over to that new employer, such as client or customer lists, or certain trade secrets that your business relies upon to succeed.
Yet in order for a non-competition agreement to work for you, it will be necessary to ensure that the agreement is enforceable, and that you take steps to enforce it if a current or former employee violates the clause.
What New Mexico Law Says About Restrictive Covenants
It is important to understand that restrictive covenants, and their enforceability, are governed by state law. Accordingly, states can vary widely when it comes to permitting non-compete agreements and enforcing non-competition clauses in employment contracts. Generally speaking, New Mexico law permits non-compete clauses and allows employers and employees to enter into non-competition agreements. Yet in order for the agreement to be enforcement, several things must be true:
- There must be consideration as in any other contract, which means an employee must receive something in exchange for agreeing to the covenant not to compete;
- Agreement must be reasonable both in time and geographic scope, which means that the agreement can only limit the employee’s ability to compete with your business for a limited amount of time and within a reasonable area in relation to your business; and
- Certain healthcare providers cannot lawfully enter into non-competition agreements under New Mexico law, so you cannot create an employment or severance agreement that includes a non-compete clause for a healthcare provider.
How to Enforce the Non-Compete Agreement
If a non-competition agreement is enforceable but a former employee violates the terms, you can enforce the terms of the agreement by working with a business litigation lawyer in New Mexico. There are many steps to take before you reach a courtroom, and many violations can be resolved without a civil lawsuit. Our business litigation attorneys can help.
Seek Advice from a Santa Fe Business Litigation Lawyer
Do you have questions about non-competition agreements or restrictive covenants in New Mexico? One of our experienced Santa Fe business litigation lawyers can assess your circumstances for you today. Contact Slate Stern Law for more information.