Are there any restrictions on the duration of non-compete obligations in Louisiana? Louisiana`s approach is similar to Texas`s in concept. Non-compete obligations are null and void in Louisiana and are considered contrary to public policy[1], unless the non-compete obligation or non-compete agreement falls within one of the exceptions recognized by law. As with the Safe Harbor rules in Texas, there is a legal exception to most employer-employee relationships,[2] which allows an employer to prevent a former employee from “pursuing or operating activities similar to those of the employer” or attracting an employer`s clients. [3] However, under this exception, an employer-employee non-compete obligation is enforceable only if it: The law limits the performance of a non-compete obligation to a maximum period of two years from the end of the employment relationship. [14] Louisiana courts have strictly enforced the statutory limitation period and declared the non-compete obligations invalid for a period of more than two years. [15] A.(1) Any contract or agreement or provision thereof that discourages any person from engaging in a lawful profession, trade or enterprise of any kind, except as provided in this section, is null and void. However, any contract or agreement or provision thereof that fulfills the exceptions provided for in this section is enforceable. Yes, if it has been designed correctly. The validity and enforceability of non-compete obligations in Louisiana are governed by a single law, La. S.R.
23:921. Failure to comply with its requirements invalidates a non-compete obligation in Louisiana. Finally, there is an industry group where the Louisiana Legislature has determined that no non-compete obligation, no matter how well prepared and compliant it is. R.S. 23:921, can be used to prohibit them from working in Louisiana. No, they are not doctors or lawyers, nor hairdressers or stockbrokers. All these professions may agree on a non-compete obligation and also be bound by a non-compete obligation if it complies with the requirements of the La. S.R. 23:921. The only profession that cannot be restricted by an otherwise valid non-compete clause in Louisiana in its chosen field is the auto salesman. The validity of non-compete obligations in Louisiana is strictly governed by a single legal provision (La. R.S.
23:921) and its judicial interpretation. The. R.S. 23:921(A)(1) begins with the general prohibition of any agreement discouraging a person from engaging in a lawful profession, trade or business, unless one of the narrow exceptions to the general prohibition contained therein is fulfilled. It provides: what are the exceptions to the general prohibition of non-compete obligations in La. S.R. 23:921? Can I claim damages for breach of a valid non-compete obligation in Louisiana? Are there professions like doctors, hairdressers, and stockbrokers where they establish such a close relationship with their patients/clients that Louisiana law prohibits the use of non-compete obligations in these situations? As long as they are an employee at will, an employee can be fired for refusing to sign a non-compete agreement under Louisiana jurisdiction. [3] We have extensive experience in negotiating, drafting, executing and terminating employment contracts and separation agreements with employers. Take the preventive step. It is much cheaper to review a contract before signing it than to process it retrospectively.
Here are some examples of non-compete obligations that contain overly broad definitions of the employer`s business: Yes. According to the. S.R. 23:921, “Compensation for the damage suffered and its benefit,” is reimbursable. However, according to Louisiana jurisprudence, lump sum damages are not refundable for non-compete violations in Louisiana. [4] We encourage our readers to download our Louisiana non-compete checklist. This handy resource will help you navigate the nuances of alliances so you don`t compete in Louisiana. On this site, you will also find a Texas non-compete checklist. If you have any questions, please contact Jim Collura. In Louisiana, job retention is a sufficient consideration to support a non-compete clause or non-compete obligation. [4] Employers use non-compete obligations (also known as restrictive covenants) across the country to prevent employees who resign or are fired from working for a competitor or starting a competing business.
Non-compete obligations are designed to help companies prevent the ability of a former manager, employee or other person with a special relationship with the company to compete with the company in business. Does relevance play a role in determining the validity of non-compete obligations in Louisiana? Yes. Non-compete obligations in Louisiana cannot last more than two years. They can be shorter, but not more than two years. Solicitation Prohibitions – Although a non-solicitation agreement is separate and distinct from a non-compete clause, the requirements of the revised Louisiana Statutes § 23:921 (C) apply to both. [36] To be valid, a solicitation ban must also meet the requirements of the legal requirements for non-compete obligations. [37] Solicitation prohibitions are interpreted strictly under Louisiana law and are generally not favored. [38] The courts will uphold the solicitation prohibitions if (1) they explicitly identify an area consisting of a parish or parish or municipality or municipalities or parts thereof in which the employer operates, and (2) the restriction cannot exceed a period of two years from the end of the employment relationship. [39] Since non-solicitation clauses are often accompanied by non-compete obligations, the requirement that they meet the same standards simplifies the application of both types of clauses. A non-compete obligation can only prevent an employee from “continuing or operating a business similar to that of the employer.” [16] Louisiana courts have been careful to point out that “the law does not require a specific definition of the employer`s business.” [17] Nevertheless, non-compete obligations that contain overly broad definitions of the employer`s business are null and void under Louisiana law.
[18] The next state in our series to investigate non-compete obligations is Texas` neighbor to the east, Louisiana. As I like to say, when you travel east and cross the Sabine River from Texas to Louisiana, all the words change, but the concepts usually remain the same. This is partly true of Louisiana`s approach not to compete. For this chapter, we are accompanied by my partner Rob Ford, who is licensed in Louisiana, the only civil court in the country. Like me, Rob has dealt with a number of issues in this arena in Louisiana, and his insight is invaluable. In today`s competitive business environment, companies often try to recruit and retain high-level executives with attractive “extras” embedded in complex contracts. These may include performance bonuses, stock options, partnership stakes and severance pay. However, they may also contain non-compete obligations or sunset clauses, which must be understood before a person accepts the terms of the contract. At Robert B.
Landry III PLC, we help employers and employees draft, enforce or challenge non-compete obligations. We also review and negotiate Board of Directors contracts. Are non-compete obligations enforceable in Louisiana? [27] According to the agenda, the report follows (doc.); See Paradigm Health System, LLC, 218 So.3d at 1071 (The non-compete clause that was invalid and unenforceable because of its overly broad wording could not be remedied because, after the removal of the offending parties, there was no language in the agreement that could be interpreted as prohibiting the conduct complained of by the employer). .