In our last post, we began speaking about non-compete agreement law here in Louisiana and some of the restrictions it places on companies. As we noted, non-compete agreements are only valid when they meet certain requirements and can be struck down—or at least altered—by the courts unless they are reasonable with respect to the time and geographical limitations they place upon a former employee.
The scope of activities restrained by the employer also needs to be reasonable. The law is not entirely solidified as to whether or not restrictions must specifically define the former employer’s business and/or the specific activities that are restricted. The case law on this point is mixed, so it is important to work with an experienced attorney when drafting non-compete agreements.
State law also requires that non-compete restrictions be based on a former employer’s protectable interests. These may include interests such as financial information, trade secrets, or ideas for new products. When it comes to which interests are considered protectable, there are specific rules in place that businesses should be aware of when drafting their non-compete agreements.
In our last post, we mentioned the term “consideration,” in connection with non-compete agreements. Consideration refers to the exchange of promises made in a contractual agreement. With non-compete agreements, there is no specific form of consideration that is required, and continued employment can serve as sufficient consideration. This means that, unlike in other states, Louisiana businesses can strike non-compete agreements with current employees.
In our next post, we’ll conclude our discussion of this topic and speak about the importance of working with an experienced attorney when negotiating these agreements.