Duration and Geographic Scope

Geographic Scope

The geographic limitation in a non-competition agreement can often be more of an obstacle for a former employee than its duration limitation. Whether a geographic limitation is “reasonable” can determine whether a court will enforce the agreement.

What is reasonable is fact-specific. Courts generally ask if the geographic limitation (a) prohibits the former employee from making a living in his or her respective trade or profession, and (b) is necessary to protect the employer’s business (e.g., customer relationships), but does not attempt to protect the employer from any potential competition where it already does business.

What is reasonable usually includes the nature of an employer’s business, the location of its actual or potential customers or clients, the nature and location of employment of those to be bound by a non-competition agreement, and the state law where enforcement is sought. Courts may enforce broader geographic restrictions for a higher level than lower level employee, particularly when the employer proves the breadth is necessary to protect something like confidential information, yet other restrictions in the agreement are narrow (e.g., carve-outs or exclusions of specific restricted clients, specific competitors whom the employee is barred from working, or specific services or products with which the employee cannot subsequently be involved.)

A reasonable geographic scope is not always defined by miles, municipal, county or state borders. But courts are most likely to enforce specific, narrow geographic limitations, i.e., those that do identify specific states, counties or other distinct locales or regions that are restricted from competition, like a former employee’s specific prior territory.

Courts will probably not enforce a non-competition agreement lacking any defined geographic limitation, regardless whether by mistake (from poor drafting) or intentional. If intentional, what would amount to a global restriction on competition would likely be held unconscionable and therefore unenforceable – in any state.

Duration

Whether a duration term is reasonable is also fact-specific. A key factor is the particular profession or industry, or nature of the employee’s employment in the profession or industry. The same duration term in one profession, industry, or circumstance may be enforceable, but unenforceable in a different profession or industry.

The geographic limitation may also bear on whether a duration term is reasonable and thus enforceable. A duration term viewed alone that seems facially unreasonable could be reasonable if the geographic limitation is narrow.

Our discussion of Illinois decisions that address these issues are here.

The attorneys at Lubin Austermuehle have over thirty years of experience defending and prosecuting non-compete, trade secret and restrictive covenant lawsuits. We are committed to fighting for our clients’ rights in the courtroom and at the negotiating table. Conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated non-compete and trade secret and covenant not to compete cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.