The BUSKLAW Newsletter

  Are you a party to a Michigan employment contract that includes non-competition, non-solicitation, and confidentiality provisions? Have you wondered whether these restrictive covenants have teeth, i.e., are they enforceable via a preliminary injunction? That's a great question, and we have the answer from Michigan Business Court Judge Christopher Yates in his recent decision:  Aaron Symonds v Lighthouse Insurance Group, Inc. Let's start with the facts. Mr. Symonds was a shareholder (i.e., not a mail clerk) in the Lighthouse Insurance Group . He signed an employment agreement that included non-competition, non-solicitation, and confidentiality obligations. He then voluntarily left Lighthouse to work for a Lighthouse competitor,  Collins & Associates , as their Vice-President of Commercial Lines. In that capacity, he began to solicit several Lighthouse clients to move their property and casualty insurance over to Collins. Symonds conceded under oath that his work fo...

Non-compete provisions are part and parcel of many employment agreements. But these provisions must be carefully drafted to be enforceable. There are three sure-fire ways to have a court invalidate your non-compete clause without much judicial cogitation: Failure to provide a reasonable duration for the clause; Failure to restrict the operation of the clause to a reasonable geographic area; and Failure to establish a protectable business interest as the subject of the clause. The first point is easy to grasp. In Michigan, you are on solid legal ground if the duration of your non-compete clause doesn't exceed one year. And you are probably okay if you add a year to that. But you're walking on quicksand if your non-compete provision lasts longer than two years.  The second point is a bit more complicated. Courts don't like to enforce a non-compete clause if its geographical scope is too wide. For example, if I'm in the packaged ice business and sell my pro...