What is a non-compete?

Non-competition and non-solicitation clauses are types of restrictive covenants that employers may include in an employment agreement. These clauses aim to limit an employee’s actions after they leave their position, regardless of the reason. Non-competition clauses typically prevent an employee from working in a specified geographical area and for a set period (e.g., within Kamloops city limits for two years). Non-solicitation clauses, on the other hand, restrict the former employee from poaching clients or fellow employees from the employer.

Non-competes are presumptively unenforceable in the employer, employee context, and it is up to the employer to prove why it is reasonable and should be enforced. Courts are strict on enforcing non-competes as they usually favor the employee’s economic freedom. For an employer to establish that a non-compete should be enforced, they must prove that:

• • they have an interest that requires protection regarding their business;
  • other less restrictive covenants would not satisfy the level of protection required; and
  • the conditions regarding geographical location and time restrictions are reasonable.

   

 Generally, the court is trying to determine if the overall restrictive covenant is reasonable or not. Due to the implied power imbalance employers have over employees, it is quite difficult for the employer to establish a non-competition clause is reasonable except in limited circumstances.

Alternative Option

Employers should consider using a non-solicitation provision instead of a non-compete in employment agreements. Non-solicitation clauses are less restrictive and still protect the employer’s business by preventing a departing employee from taking clients, employees, or business opportunities. Like non-competes, non-solicitation provisions typically include a time frame, which must also be reasonable to be enforceable.

To determine which restrictive covenant, if any, would be best suited in your employment agreements, employers should contact our Workplace Law Group. We are happy to help.