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Status of Non-Compete Clauses in Employment Contracts in Louisiana

In Louisiana, non-competition clauses that limit an employee from engaging in business similar to that of their employer are valid as long as the comply with the requirements of La. R.S. § 23:921 and were entered into after August 15, 2003. If a non-competition clause was entered into prior to August 15, 2003, the Louisiana Supreme Court's holding in SWAT 24 Shreveport Bossier Inc. v. Bond, limits the clause solely to an employee refraining from carrying on or engaging in the employee's own business similar to that of the employer, subject to certain geographical and time limitations. Any other non-competition clause will be considered invalid.

For non-competition clauses entered into after August 15, 2003, they will be found null and void unless they comply with R.S. § 23:921. The noncompetition agreement must: (1) regard a business similar to the employer; (2) specify the parish or parishes to which it applies; and (3) not exceed two years from the termination of employment. It is important that "the geographic limitation be express and clearly discernible. In addition, even if the agreement specifically lists out all of the parishes in which the agreement applies, the statute contemplates that the parishes specified in the agreement must be parishes where the ex-employer actually has location or customers. Employers are not permitted to lock former employees out of markets in which the employer does not operate. However, if a contact contains a severability provision, courts will excise the offending language from the non-competition clause without affecting the validity of the remainder of the agreement.

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