This form is a Post-Employment Restrictions on Competition for use with exiting employees exposed to commercial trade secrets or other confidential information as part of their job. This form includes a Noncompetition Covenant as well as other relevant clauses, such as a Savings Clause, a Consulting Option, and an Assignment Clause, that can be integrated into any agreement with the former employee.
Michigan Post-Employment Restrictions on Competition, also known as non-compete agreements or covenants not to compete, refer to legal provisions that limit an employee's ability to compete with their former employer after the termination of employment. These restrictions aim to protect the employer's legitimate business interests by preventing employees from using company information, trade secrets, customer lists, or specialized knowledge to gain an unfair advantage in the marketplace. In Michigan, post-employment restrictions on competition are governed by the Michigan Antitrust Reform Act (MARA) and common law principles. While non-compete agreements are generally disfavored, they are still enforceable under certain circumstances to ensure fair competition and protect employers' investments. Michigan recognizes two main types of post-employment restrictions on competition: 1. Non-Compete Agreements: Non-compete agreements are contracts in which employees agree not to engage in competitive activities, directly or indirectly, with their former employer for a specific period within a defined geographic area. To be enforceable, non-compete agreements in Michigan must be reasonable in terms of duration, geographical restrictions, and scope of the prohibited activities. They must also protect an employer's legitimate business interests, such as trade secrets, confidential information, customer relationships, or specialized training. 2. Customer Non-Solicitation Agreements: Customer non-solicitation agreements, also known as anti-piracy agreements, prohibit former employees from soliciting or contacting the employer's customers or clients for a specific period after leaving the company. These agreements aim to protect an employer's customer base and prevent former employees from poaching clients and diverting business away from their former employer. Like non-compete agreements, customer non-solicitation agreements must be reasonable in scope, duration, and geographic restrictions to be enforceable. Michigan courts evaluate post-employment restrictions on competition on a case-by-case basis, considering factors such as the employee's specialized skills, the duration and scope of the restriction, the potential harm to the employee's career opportunities, and the protection of the employer's legitimate business interests. Courts may modify or strike down overly broad or unreasonable provisions to ensure a fair balance between protecting employers and promoting employees' ability to find new employment. It is important for both employers and employees to seek legal counsel when negotiating or challenging the enforceability of post-employment restrictions on competition in Michigan, as the specific circumstances of each case can significantly impact the outcome.
