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Missouri Supreme Court Issues Non-Compete Decision That May Affect Your Business

On August  14, 2012, a non-compete decision was handed down by the Missouri Supreme Court that may affect your business. This decision is only the second time in the past 25 years that the Missouri Supreme Court has decided a non-compete case. As you know, family-owned and closely-held businesses, and also publicly-held companies, often utilize non-compete agreements to protect their businesses. 

In Whelan Security Co. v. Kennebrew, et al., decided August 14, 2012, the Missouri Supreme Court enforced a non-compete agreement against a branch manager (covering 2-years and a 50-mile radius). The Court also enforced a non-solicitation provision against  both a branch manager and a salesperson as to existing customers of the company, but refused to enforce the restrictive covenant with respect to prospective customers. However, the Court did acknowledge that, depending on the language that is in a non-compete agreement, and whether trade secrets are at stake, a trial court may still enforce a non-solicitation provision with respect to both existing and prospective customers.   

Finally, the  Supreme Court reaffirmed that an employee non-solicitation provision (i.e. a provision prohibiting employees from raiding their former employer) is presumed reasonable and enforceable if its duration is one year or less. If the duration of such a restriction exceeds one year, the Court requires a showing as to the purpose for the provision. The Supreme Court indicated that a trial court should look, in part, to the language of the actual agreement in determining the purpose in any given case. Thus, if you have an anti-raiding provision that is longer than one year, your agreement should state the purpose for that provision.





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About this Author

Michael Kass, Labor, Employment, Attorney, Armstrong Teasdale, law firm

Michael Kass is chair of Armstrong Teasdale's Employment and Labor Law practice group and is a former co-chair of the firm's Non-Compete/Trade Secrets practice group. He guides organizations, from small closely-held businesses to Fortune 100 companies, through the complex issues faced when managing employees.

Michael defends employers and their managers in state and federal courts and before administrative agencies such as the Equal Employment Opportunity Commission, the Missouri Commission on Human Rights, the U.S. Department of Labor and the National Labor Relations Board. Such...

William Corrigan, Business Litigation Attorney, Armstrong Teasdale, Law firm

An experienced business litigator, Bill serves as outside general counsel to national companies and to many small and large privately-held businesses that are headquartered in St. Louis. A former president of the Missouri Bar, his litigation skills and legal acumen have gained him national recognition. Bill is named in the 2011 edition of The Best Lawyers in America and the Super Lawyers 2011 list of top Missouri and Kansas attorneys. In 2011, he was voted by his peers as one of St. Louis' "Top 50" lawyers. In the role of outside general counsel, Bill examines the legal health of a company by reviewing corporate structures, contracts and policies. He develops strategies to improve operations and minimize risks while keeping a keen eye on organizational objectives. This part of his practice regularly involves matters related to employment and labor, mergers and acquisitions, estate and succession planning, real estate and financial transactions and intellectual property.