Employment Law – Health Care
Restrictive Covenants on Leaving an Employer
A former employee may compete with their former employer and solicit former customers as long as they did not take any action to do so before termination of their employment.
This rule does not apply to corporate officers, who owe a fiduciary duty of loyalty to their corporate employer.
The general rule for considering the whether a covenant is enforceable is that it must be no greater than is required for the protection of a legitimate business interest of the employer. This means that the restrictions must be reasonable in duration as well as geographic coverage.
To enforce a restrictive covenant an employer must prove by the totality of the circumstances that it has a legitimate business interest in need of protection. It must also prove that the restriction does not impose an undue hardship on the former employee; and that the restriction is not harmful to the public.
At least 2 years of continuous employment are required to constitute adequate consideration in support of a contractual restrictive covenant, whether the employee resigns or is terminated.