by Mary Hodges
Employment contracts often contain some type of non-compete and/or non-solicitation agreement that places restrictions on the employee after leaving his or her employment. In Missouri, these provisions are enforceable in limited circumstances.
One of the leading Missouri cases on non-compete agreements is Healthcare Svcs. of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604 (Mo. banc 2006). Not only did the Court articulate the valid, yet conflicting concerns associated with non-compete agreements, but it analyzed the circumstances in which such agreements will be enforced in Missouri.
The competing interests between the employer and the employee are: the employer’s need to be able to employ a highly trained workforce to be competitive and profitable, without risking the employee using trade secrets or soliciting the employer’s customers after leaving employment; and the employee’s need for mobility and the ability to take his or her increasing skills and put them to work from one employer to the next. The conflicting interests in the law are the freedom of the parties to negotiate contracts with unlawful restraints on trade.
Missouri law attempts to balance these concerns when enforcing non-compete agreements. As such, non-compete agreements are typically enforceable so long as they are reasonable, which equates to being “no more restrictive than is necessary to protect the legitimate interests of the employer.” Thus, Missouri courts have found that these agreements must be narrowly tailored geographically and temporally. In particular, non-compete agreements cannot merely protect the employer from competition by a former employee unless that protection involves the employer’s business secrets and customer contacts.
If a dispute arises between an employer and a former employee concerning a non-compete agreement, the burden of proof rests upon an employer to substantiate its asserted interest in its trade secrets and/or customer contacts. However, in Missouri, if a court finds that a non-compete agreement is overbroad and unenforceable, the court has the authority to give effect to an overly restrictive non-compete clause by modifying the terms of the contract to be reasonable. The analysis on whether a non-compete agreement is enforceable is generally determined on a case by case basis and considers the type of industry involved, the duration and geographic reach of the restriction, and whether the employee had access to customer lists and trade secrets. Typically, agreements with a time restriction of over two years are unenforceable in Missouri.
If you need legal advice in drafting or negotiating non-compete agreements, determining whether a non-compete agreement which you have already signed is enforceable, or representing you in a dispute concerning a non-compete agreement, contact the attorneys at Cosgrove Law Group, LLC.