Remote Work and Noncompete Agreements
Updated: May 17, 2021
By: Robert Turner
March 25, 2021
Remote work has seen a massive acceleration due to the COVID-19 pandemic and does not show any signs of slowing down post-pandemic. One consistent thing I have noticed during the pandemic is the ease in which employees have transitioned to working from home. In many cases, employers have been amazed at the consistent production despite employees not being present in the traditional way.
Many employees’ ability to work remotely from any corner of the globe has brought up previously unexplored, or at least under-explored, issues related to traditional restrictive covenants such as non-compete agreements. These agreements are typically frowned upon by courts because they are seen as a restraint on trade. Courts only enforce them if they can be deemed “reasonable” in the length of time and geographic scope are necessary to protect a “legitimate business interest.”
Geographic restrictions on former employees, commonplace in these agreements, may fall by the wayside in specific industries. For example, a 25-mile, or even a 250-mile, geographic restriction on an employee may be no good if they can perform work anywhere in the world. It is also likely a court would find an agreement with a geographic restriction of an employee who can work from anywhere unenforceable as there is no “legitimate business interest” protected by such a restriction, only a restriction on trade and fair competition.
There is likely to be a boom of litigation on this issue as it arises across the country due to the evolving workplace the COVID-19 pandemic has created. It will be interesting to see how courts rule on this new wrinkle of employment law. This author anticipates that courts will not look favorably upon non-compete agreements that seek to broaden the traditional geographic limitations to apply in a remote-work age. Of course, the best thing an employer can do is consult counsel to determine the course of action.
This article is for informational purposes only and is not intended to provide legal or tax advice. Receipt of or viewing information on this web site does not create an attorney-client relationship. You may contact our firm to establish such a relationship, but in any event, please consult an attorney or tax professional of your choosing for advice on this or any other legal topic.