Three-Factor Test for Non-Compete Agreements

April 21, 2016

Non-compete agreements come in all shapes and sizes, and the reasons why an employer may want to consider non-competes is equally diverse.

The bottom line is that a carefully crafted non-compete agreement can provide employers with a useful tool to protect its competitive position in the market place, especially in an increasingly mobile age where employees are more willing to test the barriers of non-compete agreements.

Michigan courts recognize and enforce non-competes, provided they are:

  • Reasonable in duration;
  • Reasonable in geographic scope; and
  • Advance a legitimate protectable interest.

Each of these factors is carefully weighed by Michigan courts. Fortunately, if the court views the non-compete as overreaching, it will revise it accordingly to protect the employer’s business interests.  

Contributed by Scott R. Murphy, Barnes & Thornburg.

View the on-demand webinar “Is Your Non-Compete Agreement Enforceable?” with Scott Murphy.