Client Alert: New Law and Court Case Require Reexamination of Non-compete and Non-solicitation Agree

Non-compete and non-solicitation agreements help prevent your company’s departed employees and consultants from engaging in unwanted competition and solicitation of your customers and employees. Recent changes in the law strongly support revising template agreements going forward.

The North Carolina Business Court’s recent decision in Sandhills Home Care, LLC v. Companion Home Care-Unimed, Inc. will likely impact enforceability of these agreements in the state. Specifically, non-compete terms that restrict a former employee from work unrelated to the job performed with you will not be enforced. Prohibiting employees from “advising” or “holding any ownership interest in” competitors also goes too far. Following Sandhills, companies should narrowly tailor the restricted activities subject to non-compete provisions. Non-solicitation provisions should also receive a fresh look.

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