Skip to main content
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
  • Store
  • Sign In
  • Account
    • My Account
    • Logout
    • Global
    • India
    • MENA
SHRM
About
Book a Speaker
Join Today
Renew
Rejoin Now
Renew
  • Membership
  • Certification
    Certification

    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    Events & Education

    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    Community

    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Close
  • Membership
  • Certification
    back
    Certification
    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    back
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    back
    Events & Education
    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    back
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    back
    Community
    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Join Today
Renew
Rejoin Now
Renew
  • Store
    • Global
    • India
    • MENA
  • About
  • Book a Speaker
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
SHRM
Sign In
  • Account
    • My Account
    • Logout
Close

  1. Topics & Tools
  2. Workplace News & Trends
  3. HR Magazine
  4. Tip the Scales on Non-Compete Agreements
Share
  • Linked In
  • Facebook
  • Twitter
  • Email

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.


Error message details.

Copy button
Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.


Learn More
Feature

Tip the Scales on Non-Compete Agreements

November 1, 2002 | David M. Wirtz


HR Magazine, November 2002






Employers can overcome a heavy burden of unfriendly legal precedent by providing balanced non-compete agreements.

As the manager of HR, you work hard. One of the things you’ve worked hard to develop is an agreement—often called a covenant not to compete—that forbids employees from working for a competitor if they quit.

You start with boilerplate language—but you don’t stop there. You include language forbidding the disclosure of trade secrets and other confidential information. You ask all employees to sign the agreement, and wisely limit the covenant’s geographic scope and duration.

You include an admission that your company has no sufficient legal remedy if the covenant is breached, so the only way you can be protected is with injunctive relief. This, you believe, should help you to get that injunction if you need it.

You include language making it clear that you would not have made the decision to hire the employee if he or she had not agreed to the covenant.

Then, your agreement is put to the test: A high-level employee who knows almost everything about your business unexpectedly resigns and begins working for your main competitor. She’ll be working a few blocks down the street, doing exactly the same work she did for you.

You call your attorney immediately, fax her your non-compete agreement and ask her to get an immediate injunction that will stop this employee from competing with you.

Your attorney pulls together the materials and rushes into court. The court schedules a quick hearing. The disloyal employee testifies and the cross-examination goes well. The judge takes a 15-minute break and announces his decision.

You’re stunned when he denies your request for preliminary injunctive relief.

What You’re Up Against, Historically

Is the judge crazy? Can’t he read? How could this have happened?

One explanation, which few people know about, is rooted in history—a lot of history over a very long period of time: Plain and simple, courts do not like restraints on trade, and they have not liked them since nearly the birth of our legal system.

Take this decision issued by Judge Macclesfield and published in 1711: Covenants not to compete are subject to “great abuses” by employers, who are “perpetually laboring for exclusive advantage in trade, and to reduce it to as few hands as possible.” (Mitchell v. Reynolds, 24 Eng. Rep. 347 (Q. B. 1711)) In case there was any doubt about how Judge Macclesfield feels, he concludes that as to “all restraints of trade, where nothing more appears, the law presumes them bad.”

Of course, as a good English judge steeped in common law, Judge Macclesfield needed to find precedent for his view. Incredibly, it was there to be found. A full 100 years earlier, an English court had refused to enforce a similar covenant in the Case of Tailors of Ipswich (77 Eng. Rep. 1218 (K. B. 1614)).

But even those judges were not making law. Two hundred years before that, in 1414, an English court held in The Dyer’s Case that it was then “old and settled law” that covenants not to practice one’s trade are against the common good. (Y.B. Mich. 2 Hen. 5, pl. 26 (1414))

These old precedents have stuck. In an article titled “Employee Agreements Not to Compete,” published in the Harvard Law Review in 1960, the author, Harlan M. Blake, stated that: “There is very little in the modern approach to the problem [of restraints of trade] for which a basis cannot be found in Macclesfield’s opinion.”

And the courts’ disdain for covenants continues to be expressed in the same language. In a relatively recent decision in New York, the court found that “the effect of these provisions is to indenture the employee.” (Earthweb v. Schlack, 71 F. Supp.2d 299, 311 (S.D.N.Y. 1999))

Overcoming History​

What can you do in the face of these 600-plus years of judicial antagonism? Here are several tips, all grounded in case law:

Don’t make covenants sound they like took 700 years to write. I was recently asked to review the following text, which defines what employees are barred from revealing: “All ideas, potential marketing and sales relationships, inventions, copyrightable expression, research, plans for products or services, business development strategies, marketing plans, computer software (including, without limitation, source code), computer programs, original works of authorship, characters, know-how, trade secrets, information, data, developments, discoveries, improvements, modifications, technology, algorithms and designs, whether or not subject to patent or copyright protection, made, conceived, expressed, developed, or actually or constructively reduced to practice by the employee solely or jointly with others during the terms of his employment with [company], which refer to, are suggested by, or result from any work which the employee may do during his employment, or from any information obtained from [company] or any affiliate of [company], such that said information is obtained in the performance of duties related to employment at [company].”

This passage illustrates the first—but not the only—problem with using boilerplate covenants. Lawyers often start with covenants drafted by their predecessors but they don’t take anything out—whether they understand it or not—because it is safer to leave everything in. What lawyers do, however, is add more restrictions, so that covenants that could have seemed reasonable 200 years ago are now a hodgepodge of restrictions. Who, for example, remembers what an algorithm is, let alone gains access to confidential algorithms at work?

Don’t get carried away. Many decisions in this area of the law turn on how the covenant “feels,” although a judge will not often say as much. And how these covenants are packaged can influence how judges feel about them.

For example, when covenants are included as part of a larger document that sets forth the terms and conditions of employment, the judge may examine that larger document as well. (See, for example, the case of Earthweb v. Schlack, 71 F. Supp.2d 299 (1999).)

Say that your covenant resides in a hiring package. Other documents in that package might remind employees that they are employed “at will,” describe the rights they do not have as a consequence of their lowly status, and state that you reserve the right to change the terms and conditions of employment at any time, with or without notice.

These provisions, which might protect you in other contexts, will hurt your chances of enforcing the non-compete covenant because they suggest that you have overreached, trying to “indenture”—rather than employ—the individual in question.

Keep the time period covered by the covenant short. The days of enforceable multi-year covenants are effectively over, particularly in the kinds of industries that have arisen in the information age. A recent decision from the New York State courts found that a covenant restricting an employee from working for a competitor for 12 months is “too long” in the Internet business. (Doubleclick v. Henderson, 1997 WL 731413 (N.Y. Sup.))

And when you think about it, does such a provision really make sense? Are you really going to follow the activities of a former employee for several years, making certain that she or he doesn’t get a job in your industry with a competitor? Will that former employee really be in a position to hurt you with insider information 18 months after she’s resigned? As a practical matter, isn’t the real issue the immediate fallout from an unexpected resignation and re-employment?

In my experience, the initial panic—and consequent willingness to take on substantial legal fees—subside once an employer learns that it can thrive, or at least survive, without the former employee.

Keep the geographic area covered by the covenant narrow. We have come a long way from the time of Judge Macclesfield’s decision, which sought to prevent bakers in a village outside of London from cornering the market. However, some things haven’t changed: Geographic limitations are still one of the two key areas courts consider when determining if a covenant is reasonable.

Of course, the business reality in the Internet age is that former employees may now compete with you from anywhere. But, until the legal framework is changed by the courts, you must ask yourself if it is worth restricting a former employee from working for a competitor in New Delhi when a worldwide scope will almost certainly push a judge to find that your covenant is too broad.

Don’t ask all employees to sign boilerplate covenants. You are mistaken if you think that it is cost-effective to ask new hires (or existing employees, for that matter) to sign the same version of a non-compete agreement, no matter how well crafted.

The courts try to balance an employer’s legitimate need to protect its business against an employee’s legitimate need to make a living in the trade of his or her choice. If your covenant is “way too” broad, the courts won’t enforce it at all. If it is only “too” broad, the courts may be willing to edit your version, and enforce one or more aspects of the covenant.

One way that courts assess whether a covenant is too broad is to see how the employer tailored its covenants to the particular circumstances involved. If all employees—from the accounting clerks to the vice president for research—are required to sign an equally restrictive covenant, this becomes evidence that an employer did not approach the need to protect itself from illegitimate competition in a reasonable way.

Judges dislike covenants, but they hate thieves. Your chances of getting a non-compete agreement enforced are substantially enhanced if a former employee dirtied his hands on the way out the door. It is not enough, however, if he is venal enough to attempt to recruit from your employees before he leaves, or shameless enough to rifle through your files to find and copy your trade secrets, or adept enough to copy the entire memory of the company’s computers onto a disc or two. He also must be stupid enough to get caught.

This makes it critical that you act decisively. If you get a reliable tip that an employee is engaging in such conduct, don’t hesitate to shut down his access to your company’s computers and demand that he turn over his laptop the moment he is terminated for breaching his fiduciary duty. It is incredible what you are likely to find, from new business plans (often cut and pasted from your business plans), to customer lists, to e-mail messages you might not be very proud of.

If it’s confidential, treat it that way. Courts look beyond the documentary trail when figuring out if information taken by a former employee is truly confidential. One thing courts look at is how you treated the information that you now claim would devastate your business if a competitor were to obtain it.

For example, was this data marked “confidential?” Were copies floating all over the place? When meetings were held and documents distributed, was there any discussion about their confidentiality? Were copies collected at the end of the meeting?

You must be alert to these issues as you conduct your business on a day-to-day basis.

Beware of state statutes. Many states have statutory provisions governing covenants, so beware—particularly if you are hiring employees who have worked elsewhere and might be covered by a competitor’s covenant. Some of these state statutes are quite precise about what will, and will not, be enforceable.

Don’t hide restrictive covenants under the guise of something else. Historically, the courts have hated indirect restrictions with an almost greater passion than direct restrictions. Take “training agreements,” for example, which require an employee to pay back the costs of her training if she leaves your employment sooner than you would like and takes “her” training with her. Yes, someone who takes the training and runs is irritating. No, you cannot punish her for it.

This is not to say that training agreements are per se unlawful, but you must be aware of such decisions as Heartland Securities Corp. v. Gerstenblatt, et al., (2000 WL 303274 (S.D.N.Y.)), in which the court found that “refunds of training costs provisions are designed to chill people from changing jobs, and thus, function as restrictive covenants.” The court ruled that enforcing the training agreements in this case would have been tantamount to “indentured servitude,” precisely the kind of label used by Judge Macclesfield 400 years earlier.

What Does the Future Hold?

Employee mobility is an exploding phenomenon that shows no sign of abating. In this context, employers must pare down their expectations about the extent to which they will be able to keep former employees from moving to competitors.

That isn’t to say employers must give in to despair. It is still possible to craft a covenant not to compete that is enforceable. However, slowing employee mobility has been a rough road to travel for 600 years, and it is getting rougher.

Author’s note: Credit for the historical findings cited in this article goes entirely to Dan Messeloff, whose article “Giving the Green Light to Silicon Alley Employees: Non-Compete Agreements Between Internet Companies and Employees Under New York Law,” appeared in the Spring 2001 edition of the Fordham Intellectual Property, Media and Entertainment Law Journal.

David M. Wirtz has been representing management in the public and private sectors for 25 years. He is a principal at Grotta, Glassman & Hoffman, P.A., in New York, and is a member of the Section on Labor and Employment Law of the American Bar Association.


Artificial Intelligence in the Workplace

​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.



Related Content

Kelly Dobbs Bunting speaks onstage at SHRM24
(opens in a new tab)
News
Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

(opens in a new tab)
News
A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

(opens in a new tab)
News
How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

Stay up to date with the latest HR news, trends, and expert advice each business day.

Success title

Success caption

Manage Subscriptions
  • About SHRM
  • Careers at SHRM
  • Press Room
  • Contact SHRM
  • Book a SHRM Executive Speaker
  • Advertise with Us
  • Partner with Us
  • Copyright & Permissions
  • Post a Job
  • Find an HR Job
Follow Us
  • LinkedIn
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • SHRM Newsletters
  • Ask An Advisor

© 2025 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose. Disclaimer


  1. Privacy Policy

  2. Terms of Use

  3. Accessibility

Join SHRM for Exclusive Access to Member Content

SHRM Members enjoy unlimited access to articles and exclusive member resources.

Already a member?
Free Article
Limit Reached

Get unlimited access to articles and member-exclusive resources.

You've reached the limit of 1 free article this month. Join to access unlimited articles and member-only resources.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join the Executive Network and enjoy unlimited content.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join and enjoy unlimited access to SHRM Executive Network Content.

Already a member?
Unlock Your Career with SHRM Membership

Please enjoy this free resource! Join SHRM for unlimited access to exclusive articles and tools.

Already a member?

Your membership is almost expired! Renew today for unlimited access to member content.

Renew now

Your membership has expired. Renew today for unlimited access to member content.

Renew Now

Your Executive Network membership is nearing its expiration. Renew now to maintain access.

Renew Now

Your membership has expired. Renew your Executive Network benefits today.

Renew Now