In Louisiana, job retention is a sufficient consideration to support a non-compete clause or non-compete obligation. [4] Non-competition obligations between several states are commonplace. The application of these agreements is generally not a problem, as most States use an adequacy test to determine their applicability. Texas law requires an assessment of relevance in terms of time, geographic area, and restricted activity, much like in most other states (Tex. Bus. and Com. Code § 15.50). If the adequacy criterion is met, these agreements may be enforceable. This is not the case in Louisiana. However, there are exceptions such as the sale of a business`s goodwill, the dissolution of a partnership, the relationship between the employer and the employee, the franchisor and the franchisee, the company and the shareholder, the company and the partner, and the employer and the IT employee. However, even where such exceptions exist, a court may require that the non-compete agreement more narrowly define the types of businesses and activities that an employee is prevented from carrying out.
Examples of non-compete obligations that Louisiana courts have found appropriate: Once it is proven that a particular non-compete obligation falls within one of the listed exceptions, most Louisiana courts require that a valid non-compete obligation contain a prohibited area described by municipalities, municipalities or parts thereof, as well as a maximum of two years from the end date of the relation. These requirements flow directly from the wording of the act. Non-compete obligations, also known as competition clauses or restrictive covenants, are employment contracts used by employers to limit an employee`s ability to compete with the employer by stealing customers or trade secrets. Enforceable agreements must balance the protection of the employer`s legitimate business interests against unfair competitive advantage with the employee`s right to work in a field for which he or she is trained. In general, courts decide what is deemed appropriate or inappropriate by considering the nature and size of the business, the duration and geographic area to which the restrictions apply, and whether the employee received a reasonable consideration or benefit at the time the contract was signed. A.(1) Any contract or agreement or provision thereof that discourages any person from engaging in any lawful profession, trade or enterprise of any kind, except as provided in this Division, is null and void. However, any contract or agreement or provision thereof that fulfills the exceptions provided for in this section is enforceable. In Louisiana, an employment contract may prevent an employee from carrying on a business similar to the employer`s as long as (1) the non-compete agreement designates certain municipalities, municipalities and/or parts thereof where the restriction applies, (2) the employer carries on a similar business there, and (3) the duration of the restriction does not exceed two years. In addition, an agreement between a corporation, partnership or limited liability company and its shareholders, members or members may prevent shareholders, members or members from owning a portion of a competing corporation provided that the agreement meets the same three requirements set out above. These rules are more restrictive than those in Texas, but provide more clarity on how to draft these provisions. Non-compete obligations are also interpreted strictly in favour of the employee and against the party seeking enforcement.
In the event of a breach of contract, the limitation period – called « prescription » in Louisiana – is ten (10) years. [34] It should be noted, however, that in the case of older, long-standing non-compete obligations that existed prior to the coming into force of the current 2003 Act, such agreements will be interpreted under an earlier and somewhat more restrictive Louisiana law. Indeed, Louisiana courts have refused to retroactively enforce the state`s non-compete clause. [35] Finally, there is an industry group in which the Louisiana legislature has determined that no non-compete obligation, regardless of how well prepared and compliant it is with the. A. 23:921 can be used to prohibit them from working in Louisiana. No, they are not doctors or lawyers, nor hairdressers or stockbrokers. All these professions may agree on a non-compete obligation and also be bound by a non-compete obligation if it complies with the requirements of the La. S.R. 23:921.
The only profession that cannot be restricted by an otherwise valid non-compete clause in Louisiana in its chosen field is the auto salesman. As noted here, the development of non-compete clauses is problematic in several states, including Louisiana. An enforceable non-competition clause in Louisiana requires much more than reason. All requirements of the Revised Louisiana Statutes § 23:921 must be met for a valid non-compete obligation in Louisiana. One approach is to exclude Louisiana from your non-compete obligations in multiple states, with a separate agreement for Louisiana that is consistent with Louisiana law. This way, you protect your customers` business in today`s competitive market. [2] Interestingly, the Louisiana Non-Compete Act provides an additional employer-employee exemption that allows employers to contractually prohibit their employees from « engaging in any work or activity to design, write, modify, or implement a computer program that competes directly with a confidential computer program for a maximum period of two years from the date of termination of employment. is owned, authorized or marketed by the employer and to which the employee has had direct access during the term of his or her employment or service. « THE R.S.
23:921G(1). In addition, this computer-related exception applies to a much broader category of statutory « employees » such as « any person, partnership, partnership or other entity that enters into or agrees to enter into a contract with an employer to provide, provide or provide services to, for or on behalf of that employer. » Id. § THE R.S. 23:921G(4). In order to further protect the right of workers to work in the field of employment of their choice, the prohibition. S.R. 23:921 a contract of employment to determine by contractual provisions the applicability of the law of another State, unless the employee reconfirms this choice of law after the occurrence of the incident that is the subject of the dispute. Thus, as soon as an employee is dismissed and begins to compete with his former employer, the applicability of the provision of the non-competition obligation which selects the applicability of the law of another State is valid only if the employee accepts it again as soon as his former employer complains of the alleged breach of the non-competition obligation. Louisiana`s approach is similar to Texas`s in concept. Non-compete obligations are null and void in Louisiana and are considered contrary to public policy[1], unless the non-compete obligation or non-compete agreement falls within one of the exceptions recognized by law. As with the Safe Harbor rules in Texas, there is a legal exception to most employer-employee relationships,[2] which allows an employer to prevent a former employee from « pursuing or operating activities similar to those of the employer » or attracting an employer`s clients. [3] However, under this exception, an employer-employee non-compete obligation is enforceable only if Louisiana has a long history of pursuing strong public policy against non-compete obligations.
Because these agreements differ from the general law, the right to work in the field you choose, the Louisiana jurisdiction has the exceptions to that of La. S.R. 23: 921 These exceptions are largely based on relationships. The list of exceptions includes the relationship between the employee and the employer, the sale of the goodwill of a company, the dissolution of a partnership, the relationship between franchisor and franchisee, the relationship between the employer / IT employee, the relationship between the company and the shareholder, the partnership / partner relationship without taking into account a possible dissolution and the relationship between the company and the limited liability company / member. A non-compete obligation can only prevent an employee from « continuing or operating a business similar to that of the employer. » [16] Louisiana courts have been careful to point out that « the law does not require a specific definition of the employer`s business. » [17] Nevertheless, non-compete obligations that contain overly broad definitions of the employer`s business are null and void under Louisiana law. [18] However, as with many statutes, a recent decision of the Court of Appeals for the First Circuit shows that the real mystery arises when a court is asked to interpret and apply the plain language of R.S. .