Covenants Not to Compete

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Clients have called our office asking the question: “When is it okay for my employer to tell me I can’t compete with my employer’s business when I quit?” To answer that question directly – not very often.

Many times in employer/employee relationships, a boss will ask their employee to sign what is commonly called a “covenant not to compete” when they are hired. The purpose of this “covenant” is to protect the employer from being burned if an employee is learning the trade from their employer and then decides to take that knowledge and open up a competing business across the street. You can see where the original business would want to protect itself in a situation like this. At least that was the reason these agreements were allowed in the first place.

What has developed has been “agreements” that restrict employees in no certain terms regarding time and area. Mississippi Courts don’t like this. In a capitalist society that encourages freedom of enterprise, the law does not favor restricting free trade and individual freedom. Our Supreme Court has been clear about this issue: Covenants not to compete are not favorites of the law. These agreements must be reasonable and specific as to the time and geographic scope of the restriction.

In other words, an agreement signed between an employer and an employee that states you may not open another business within two months of quitting right across the street from the employer’s business would more than likely be acceptable under our current law.

An agreement for an employee to never open a business in the state of Mississippi after leaving the employer’s business for whatever reason is not an enforceable agreement.
If you have any questions about laws regarding covenants not to compete, feel free to call our office or email me at: ericb@coxwelllaw.com

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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