In a previous post we explored some important distinctions regarding non-compete laws in different states. And since we are based in Kansas City, we focused on differences in Kansas and Missouri.
You may recall that the enforceability of non-compete agreements stems from the need to preserve and protect legitimate business interests. With that backbone, let’s explore various components of non-compete agreements here.
Types of Competition
Both Kansas and Missouri recognize an interest in protecting unfair competition. The idea is that if an employee gained a competitive advantage by working for a company, that company has a protectable interest in preventing him or her from using that competitive advantage against the company. That protection, however, should be clearly stated in a non-compete agreement.
So what is a “competitive advantage”? Both states are likely to protect skills that are not generally known throughout a company’s industry. Kansas considers knowledge a stranger may have as non-protectable. Similarly, Missouri seeks to protect businesses from competition that is deemed “meaningful.” If a former employee in Missouri goes to work for a competitor that only has a tiny sliver of the market share in a company’s industry, the state may not see that as a violation of a non-compete.
Protecting Client Relationships
Generally speaking, businesses can prevent a former employee from soliciting and/or accepting work from a former employer’s clients. In Missouri, there are some limitations on this point. Specifically, Missouri may not enforce non-compete terms against a former employee that did not have relationships with the former employer’s customers. Rather, Missouri courts will look at the quality, frequency, and duration of exposure to customers to decide if a particular former employee was in a position to gain special influence over a company’s customers.
What if the Employer Terminates Employment?
In Kansas, an employer’s termination of employment doesn’t generally affect the enforceability of a non-compete, as long as the termination is not a wrongful termination.
In Missouri, an employer’s decision to fire an employee may make a non-compete unenforceable (but it isn’t a hard line rule). If the employer’s actions constitute a material breach of the employment contract, the employer may be barred from trying to enforce the non-compete. Missouri trial courts have discretion to consider the involuntary nature of an employee’s termination in weighing the fairness of enforcing a non-compete against them. This often depends on the circumstances surrounding the employer’s decision to fire the employee.
It is also important to note that, at least in Missouri, a separation agreement has a good chance of rendering a non-compete unenforceable if it is found to supersede the employment agreement.
Practical Considerations
As you can see from the additional elements considered above, the enforceability of non-compete agreements can vary widely from state to state. As a result, it is imperative that companies and employees obtain experienced legal counsel to guide them through these types of employment law issues. This is especially true in Kansas City due to the state line running right down the middle of the city.
If you’d like to learn more about how these issues impact you and your non-compete agreements, please contact the Employment Law Attorneys at Krigel & Krigel.
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Image: Thinkstock/alexskopje
*This article is very general in nature and does not constitute legal advice. Readers with legal questions should consult with an attorney prior to making any legal decisions.