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Are Businesses Allowed To Use Non-Compete Agreements In Michigan?

One concern a business may have is that, when its employers stop working for it, they may immediately go and work for a local competitor, thus potentially hurting the business's competitive business interests. Thus, businesses sometimes look to ways to prevent this from occurring. One legal device aimed at such prevention is the non-compete agreement. A non-compete agreement is an agreement between a business and an employee which restricts the employee from taking certain types of jobs for a time after their employment with the business ends.

Non-compete agreements are legal here in Michigan. The state law which authorizes businesses to use such agreements does specify some requirements that such agreements have to meet in order to be enforceable. Specifically, such agreements have to be reasonable when it comes to all of the following things:

  • The employment/line of business that the agreement restricts the employee from working in.
  • The geographic scope of the agreement's restrictions on the employee.
  • The amount of time the restrictions in the agreement are in place following the worker's employment with the business ending.

When a business and an employee have a non-compete agreement in place, and the employee violates the agreement, the business will generally have legal options available to try to enforce the agreement.

There are many different issues that can come up in litigation related to attempts to enforce a given non-compete agreement. One is whether the agreement in question meets the above-mentioned reasonability requirements.

Thus, in addition to potentially being very impactful on a company's competitive business interests, enforcement litigation regarding non-compete agreements can also be very complicated. Business law attorneys can provide assistance to businesses when it comes to legal matters regarding the enforcement of non-compete agreements.