Restrictions to prevent competition by a present or former employee are held valid when they are reasonable and necessary to protect the interests of the employer. For example, a provision in an employment contract which prohibited an employee for two years from calling on any customer of the employer called on by the employee during the last six months of employment would generally be valid. Courts will closely examine covenants not to compete signed by individuals in order to make sure that they are not unreasonable as to time or geographical area.
A covenant not to compete (also known as a non-compete clause or agreement) is a contractual agreement between an employee and a medical staffing agency that restricts the employee from working for or starting a competing business within a specified location and time frame. In South Dakota, there are several types of covenant not to compete agreements, each with its own variations and requirements. 1. General Covenant not to Compete Agreement: This is the most common type of agreement used between medical staffing agencies and their employees. It prohibits an employee from directly competing with the agency by providing similar services within a specific geographic area for a predetermined period, typically within a few miles and for a few years. 2. Non-solicitation Agreement: In addition to restricting competition, a non-solicitation agreement focuses on prohibiting an employee from soliciting the agency's clients, patients, or employees for their own benefit or for a competing business. It ensures that businesses retain their customer base and workforce when employees leave the agency. 3. Trade Secret Protection Agreement: This type of agreement focuses on protecting confidential information and trade secrets of the medical staffing agency. It prevents an employee from using or disclosing sensitive business information, such as client lists, proprietary business strategies, or unique techniques, that could harm the agency's competitive advantage. 4. Customer Nonsolicitation Agreement: Similar to a non-solicitation agreement, a customer nonsolicitation agreement specifically prohibits an employee from soliciting or doing business with the agency's clients or customers for a certain period after the employment ends. It helps retain client relationships and prevents employees from taking advantage of their knowledge of the agency's clients. 5. Geographic Restriction Agreement: This type of agreement restricts an employee from competing within a specific geographic area, often defined by county, city, or a radius from the agency's physical office. It prevents employees from opening a competing business or working for a competitor in the same market. 6. Duration Limitation Agreement: A duration limitation agreement sets a specific period during which an employee is prohibited from competing with the agency. The duration can vary depending on industry standards, the nature of the business, and the employee's position, but it is typically within a few years. It's important to note that the enforceability of covenant not to compete agreements in South Dakota may vary, and they must be reasonable in terms of scope, duration, and geographic limitations to be upheld by the court. Employees and medical staffing agencies should consult legal professionals to ensure their agreements comply with South Dakota laws.
