the investment. Meanwhile, Ryan is free to practice his business elsewhere and get his own clients. It is unlikely the court will see limitations on direct competition as undue. Next, Ryan and T&R are in a highly competitive business with lots of players. The court will likely not see a non-compete agreement as being unduly harmful to society. Brutus, on the other hand, is not competing with T&R in any way. T&R’s lawsuit against Brutus is weaker, because now, it just looks like T&R just doesn’t want Brutus to make a living at all for himself and wants to deprive the public of his services. Courts will rarely enable this kind of vindictive attitude. The trickier situation is Urban. Urban is competing with T&R and taking its customers. Part
Work the non-traffic side - Stay Safe!
of Urban’s new business arises from investments from the former employer. However, the former employer did not really make investments to attain and retain Urban’s clients. Urban developed these relationships entirely on his own, just simply under the banner of T&R. How much T&R’s banner contributed to those relationships is a matter of debate. This situation would need more detail before a court could make a determination, and it may vary state-to-state. Generally speaking, tow companies should engage in practices that minimize these situations (note sidebar). Consult with an experienced lawyer before hiring and training employees. Good practices, in the management of employees and clients, can help avoid these situations.
Keys to Enforceable Non-Compete Agreements
The key to making non-compete agreements enforceable is creating the proper record for later use in court. A lawyer attacking a non-compete for a former employee is going to attack three main things that might be defended with having written documentation on file: 1. First, he is going to tell the court that the employee had no real choice but to sign the non-compete agreement and the employee was not properly compensated for the detriment he took on when he signed it. 2. Second, the lawyer is going to say that the employer is overreaching, greedy, and vindictive—i.e., unduly restricting the employee’s ability to fairly compete in the market. 3. Third, the lawyer may argue that the restrictions—even though otherwise enforceable—are destroying the former employee’s ability to make a living and/or destroying the ability of the community to get a much-needed service.
AmericanTowman.com | November 2021 • South 71