Employers have a legitimate interest in protecting their business as much as possible in case employees leave the company with business and client information. As such, not surprisingly, non-compete agreements are becoming commonplace in employment relationships. While the general rule is that parties can contract for anything they want, a contract restricting business competition may not be enforceable. As a general rule, a contract cannot is void if it restrains one from exercising a lawful profession, trade or business of any kind, unless otherwise permitted. Oklahoma courts have ruled covenants not to compete can only limit “unfair competition.”
Non-compete agreements are strictly governed by statute. Section 219A(A) of Title 15 of the Oklahoma Statutes states, “A person who makes an agreement with an employer . . . not to compete with the employer after the employment relationship has been terminated, shall be permitted to engage in the same business as that conducted by the former employer or in a similar business as that conducted by the former employer as long as the former employee does not directly solicit the sale of good, services or a combination of goods and services from the established customers of the former employer.” Any agreement in conflict with that provision is void and unenforceable.
While Section 219A addresses the limits of contracts prohibiting the solicitation of an employer’s established customers after an employee leaves the company, Section 219B addresses the extent to which a former employee can be prohibited from recruiting and hiring employees/independent contractor from the former employer. Section 219B of the Oklahoma Statutes states, “A contract or contractual provision which prohibits an employee or independent contractor of a person or business from soliciting, directly or indirectly, actively or inactively, the employees or independent contractors of that person or business to become employees or independent contractors of another person or business shall not be construed as a restraint from exercising a lawful profession, trade or business of any kind.
Restrictive employment covenants are not, and should not be, boilerplate agreements. Employers and employees should consider the impact a restrictive employment covenant can have on both parties in the unfortunate event an employment relationship comes to an end. Employers should seek the assistance of counsel before drafting restrictive employment covenants to ensure they are enforceable, and employees should seek the assistance of counsel before signing any such restrictive employment covenants so they understand the full impact of doing so.
*Disclaimer: The above is only a general description of law and is not meant to provide any legal advice to any readers.