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Nevada Supreme Court Addresses Nationwide Non-Compete

Given California's hostility to non-compete agreements, it is easy to lose sight of the fact that other states don't have the same attitude.  In neighboring Nevada, the courts will look to whether the restraint on competition in reasonable.  A restriction is reasonable when it is "reasonably necessary to protect the business and goodwill of the employer."  Jones v. Deeter, 112 Nev. 291, 296 (1996).  Nevada courts evaluate post-employment non-compete agreements with a higher degree of scrutiny than other kinds of non-compete agreements because of the seriousness of restricting an individual's ability to earn an income.  Ellis v. McDaniel, 95 Nev. 455, 459 (1979).

In Shores v. Global Experience Specialists, Inc., 134 Nev. Adv. Op. 141 (2018), the trial court granted a preliminary injunction enforcing a non-compete agreement against a former employee.  The agreement covered the entire U.S. and the employer presented evidence to the trial court that it conducted business in 33 states.  While acknowledging that the employer may be able to demonstrate that it had business in every state, the Nevada Supreme Court found that the employer had failed to establish that the reasonableness of the non-compete agreement by showing its restrictions do not extend beyond the geographical areas in which employer conducts business. 

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...