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Nuts and bolts of Kentucky noncompete agreements, part 2

On Behalf of | Apr 6, 2021 | Business Law |

In part 1 of this post, we introduced the concept of the noncompetition agreement that an employer may require an employee to sign that will restrict by contract the employee’s right to engage in competitive employment or business activity after they leave. We talked about what Kentucky courts say about the enforceability of noncompetes.

For example, limits on how long the noncompete will restrain the ex-employee’s competitive activities as well as on where the employee may engage in competition must be reasonable, fairly protect the employer and not cause undue hardship to the ex-employee. In addition, the terms must not be against the public interest.

We explained that employers and employees often litigate noncompete disputes in Kentucky state or federal courts applying Kentucky law.

Minimizing harm with a court order before the court hears the main lawsuit

An employer may fear that by the time they get a judgment in their favor, the employee will have irreversibly harmed their business through anti-competitive activity. Often employers first go to court seeking an order that the ex-employee stop working for a competitor or cease other, similar activity until the court can consider the evidence and decide whether to enforce the agreement as written or to modify the terms to become reasonable.

These pretrial orders are usually called temporary restraining orders (TROs) or preliminary or temporary injunctions.

To grant a TRO or similar order, the court must find that the noncompete gives the employer rights that will otherwise be violated and that without the injunction, the employer will be irreparably hurt or damaged before a court hearing on the merits can be held or the court would be unable to reverse the employer’s losses without an order stopping them.

Seek legal guidance

Any Kentucky business facing issues related to noncompetes should seek experienced legal advice as this area of law is complex. Matters a Kentucky lawyer can help with include:

  • Advice and drafting of an agreement meeting business needs that also will stand up in court
  • Review of existing noncompetition contracts
  • Interpretation of a noncompete in the context of a particular employee leaving
  • Review and initiation of legal remedies like negotiation to settle a noncompete dispute or filing a lawsuit for a TRO or preliminary injunction to stop an ex-employee from violating a noncompete followed by a trial on the merits, if necessary
  • Advice to a business seeking to bring on a new employee with a noncompete from a previous employer that may restrict the hire
  • Gathering expert and professional opinions from economists and financial analysts about the likely financial harm to the employer from the breach of a noncompete that could hurt sales and revenue
  • Negotiation with a departing employee seeking to be relieved of noncompete limits or defense of a lawsuit challenging them

An experienced employment and business lawyer can answer questions about the law of noncompetes at any stage of the employment relationship.

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