Louisiana Supreme Court Allows Employer-Friendly Decision in Non-Compete Case to Stand
Drafting an enforceable (and meaningful) non-compete provision in an employment agreement can be difficult. Many states, like Louisiana, recognize that non-compete provisions in employment agreements raise a serious public policy concern. In Louisiana, this public policy is set forth in La. Rev. Stat. 23:921. It requires non-compete provisions to set forth specific parishes or municipalities in which competition is restricted and limits their duration to two years.
Generally, courts strictly construe non-compete provisions and will often strike provisions that may otherwise comply with the statute. But the Louisiana Supreme Court recently allowed a decision to stand from the Louisiana Fourth Circuit Court of Appeal that took a more flexible approach. In Causin, L.L.C. v. Pace Safety Consultants, LLC, 2018-0706 (La. App. 4 Cir. 01/30/18), the employee tried to invalidate his non-compete obligation by arguing that the following language related to the non-compete’s geographic scope was overbroad:
“Employee recognizes that from time to time, the Company’s business may expand to other parishes within Louisiana and/or other counties or municipalities in other states and Employee agrees that Company may amend Exhibit ‘A’ and append it to this agreement with the same force and effect as the original Exhibit ‘A.’ Company will provide Employee with any and all amendments. Employee and the Employer acknowledge and agree that the Company does business in all of the parishes contained in Exhibit ‘A.’ Employee agrees that if the Company provides him with an amendment to Exhibit ‘A’ that it will represent as fact that the Company does business in all of the geographical areas identified in such an exhibit unless the Employee provides the Company with written notice disputing that fact within seven days of his receipt of the amendment.”
The court could have reasoned that restricting an employee’s right to work in yet-to-be identified parishes violates that plain language of La. Rev. Stat. 23:921. But the court ultimately held that the naming of the parishes and counties where the employer does business, together with an avenue for the employee to contest any expansion, operated to satisfy the statutory requirements.
This employer-friendly decision gives employers guidance, and some leeway, when drafting non-competes that seek to provide protections as the company grows.