We discussed the general standards for enforcing non-compete agreements in a prior blog post. A recent decision from the Plymouth Superior Court highlights the fact-specific nature of the analysis in evaluating the enforceability of a non-compete agreement, and reinforces the risk to employees who carelessly enter such agreements with an employer.
The Defendant, Daniel McKinnon, took a hair stylist position with the Plaintiff, Zona Salon straight out of cosmetology school. At the time of his hiring, McKinnon signed an agreement that, for twelve months following the end of his employment, he would not directly or indirectly compete with Zona in its ‘market area’ of Norwell, Hingham, Hanover, Cohasset, Scituate, Rockland, and Pembroke. He also agreed, among other things, not to solicit business from any client of Zona.
After about four years of employment, Zona terminated McKinnon. Approximately one month after McKinnon’s termination, Zona discovered that McKinnon had accepted a hair stylist position in Hingham and that he had solicited one of Zona’s customers. Zona sued to enforce the non-compete agreement and asked the Court to grant a preliminary injunction barring McKinnon from competing with Zona and from soliciting any present or former customer. McKinnon argued that he should not be bound by the non-compete because he had not read all of the papers he signed when he was hired, he was in need of a job at the time and in no position to negotiate the terms, and he was involuntarily terminated.
The Court granted Zona’s motion for a preliminary injunction and precluded McKinnon from continued work in violation of the restrictive covenants. In doing so, the Court emphasized several factors, including the limited nature of the restrictions- which were tailored to specific towns and the restrictions lasted only one year- as well as the irreparable nature of any harm to Zona’s good will that would result from McKinnon’s continued breach of the agreement.
No matter the lack of sophistication, nature of the position or the lack of bargaining power of the employee, Courts may very well enforce reasonably-tailored non-compete agreements, provided that they serve a legitimate business interest. The Zona case demonstrates both the need for employers to draft appropriate, narrowly tailored, agreements and the importance for employees to actively review and negotiate these contracts in advance of signing them.