Competition Non Competition With Friends In Michigan
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FAQ
If the restriction on the employee is for an unusually long period of time, there's going to be a problem. One to two years is typically reasonable, while three to five years is unlikely to be upheld by a court.
If you are employed as a “just cause” employee and you choose not to sign the noncompete agreement, the Michigan courts have found that the refusal to enter into such agreement individually does not constitute “just cause” for termination.
Under this law, in order to be enforceable, non-compete agreements must (1) be designed to protect an employer's reasonable competitive business interests; (2) have a reasonable duration; (3) have a reasonable geographic scope; and (4) prohibit competition only in a clearly defined line of business.
Some states (California and a few others) have made non-competes void by statute, but even in states that have not passed anti-non-compete laws, courts have been trending toward avoiding enforcement of these provisions (in favor of the employee) for years.
Courts also tend to frown upon non-compete agreements that don't allow an employee to leave the region or state and continue to work, A non-compete agreement is unenforceable, if the geographic scope of the restriction is far too broad.
Several factors can void or limit the enforceability of a non-compete agreement, including overly broad restrictions, unreasonable time frames or geographical limits, lack of consideration (such as compensation or job opportunities provided in exchange for the agreement), and violation of public policy.
There are many legal defenses against enforcement of a non-compete or non-solicit agreement. For example: The agreement is overbroad in its time or geographic scope. The scope of the non-compete or non-solicit may be overbroad in geography or time.
1 Michigan courts continually uphold and enforce non-competes. 2 However, recent non-competes in Michigan have been subject to debate because of the many disadvantages such clauses pose to employees.
Although disfavored in Michigan, they are not completely void. A noncompete agreement must be reasonably narrow, in that it protects an employer's reasonable competitive business interests. It must be reasonable in its duration, geographical area and the type of employment or line of business.
