re: Professional non-compete clauses

Your lawyer is a pansy and you need a new one.

In the course of his employment, an employee may not only learn the business or trade of his employer, but he may also gain access to information of which the disclosure, or use by other persons, may have a negative impact on the employer's interest, such as industrial secrets or special procedures, marketing plans, or even lists of clients. Or an employer may invest substantial resources in training an employee for the performance of technical functions or managerial duties, which enables the employee to develop skills that are the equivalent of a capital the investment of which in competition with the interest of the employer, after termination of the employment relation, may not be fair. That interest of an employer is, no doubt, worthy of protection, which justifies the inclusion in some employment contracts of a clause whereby the employee binds himself not to compete with the employer in the latter's line of business after the employment relation comes to an end.

Nevertheless, the unrestricted protection of that interest would run counter the employee's interest in exercising his skill, or practicing his trade, on which his livelihood depends, an interest strongly connected to the employee's freedom. Louisiana Lawmakers have had to weigh those interests very carefully in order to resolve their conflict.

Here's some law on it:

To be enforceable against the employee, an agreement not to compete must be limited to a certain geographical area, to a certain time, and to a certain kind of business. In other words, conventional restrictions to an employee's freedom to work after termination of a particular employment relation are valid only if reasonably limited.

Concerning the area such an agreement is meant to cover, a failure to specify clearly the parishes, municipalities, or other geographically delimited spaces, where the employee binds himself not to compete with his former employer, makes the agreement null and void. Thus, an agreement that binds the employee to abstain from competition within a certain radius of a city measured in miles is not enforceable because it is not sufficiently clear. On the other hand, an agreement that binds the employee not to work for any of the employer's competitors anywhere in the continental United States, although clear as to its geographical reach, is not enforceable because the excessively broad geographical area makes it unreasonable. That is so even if the parties have provided in another clause that, if found too broad, that geographical area of application can be reduced to make it compatible with prevailing law.

Concerning the time limitation, the period of two years as maximum duration of such an agreement is expressed in the law with sufficient clarity to avoid difficulty in strictly complying with that provision.

Concerning the kind of business, an agreement will be valid only if the employee binds himself not to compete in a business similar to that of the employer, which calls for sufficient specificity in the description or indication of that business of the employer in which the employee will abstain from competition. Thus, in a case where the employer's business consisted of selling frozen alcoholic and non-alcoholic beverages of a certain kind, the court found invalid an agreement whereby the employee had bound himself not to sell frozen drinks for consumption by the public in general after termination of his employment because, although the frozen beverages involved in the employer's business were limited in kind, the agreement would have prevented the employee from selling frozen beverages of all kinds.

See Francois Chiropractic Center v. Fidele, 630 So.2d 923 (La. App. 4th Cir. 1993).
Johnson Controls, Inc. v. Guidry, 724 F. Supp. 2d 612 (W.D. La. 2010) (noncompetition clause that fails to specific the parishes to which it applies is unenforceable); Heart's Desire, LLC v. Edwards, 46-222 La. App. 2 Cir. 4/27/11, 2011 WL 1630175 (La. Ct. App. 2d Cir. 2011) (unpublished) (“Lack of geographical restriction in a noncompetition agreement is fatal to the agreement and renders it invalid and unenforceable… . Moreover, reformation of an otherwise invalid noncompetition clause would run counter to the requirement of strict and narrow construction, would allow ambiguous noncompetition agreements and would place courts in the business of either saving or writing a contract that is not generally favored in the law.”).

Defendant cannot prohibit competition in parishes in which it does not do business nor can a defendant prohibit competition in “Texas, Mississippi, Alabama, and Florida” without listing specific municipalities. In re Gulf Fleet Holdings, Inc., 2011 WL 1313901 (Bankr. W.D. La. 2011). Because of the severability clause in the agreement, the court was able to strike the references to Texas, Mississippi, Alabama, and Florida and render unenforceable in Louisiana parishes where the defendant does not do business.) Id.; see also Arthur J. Gallagher & Co. v. Babcock, 2011 WL 121891 (E.D. La. 2011) (Noncompetition clause that prohibited defendants from engaging in insurance-related business in each of Louisiana's sixty-four parishes was overbroad, but, given the severability clause, the agreement could be reformed to prohibit competition in the nine parishes in which the defendant sold life and health insurance was proper.).
See Bail Bonds Unlimited, Inc. v. Chedville, 831 So.2d 403 (La. App. 5th Cir. 2002), in which the court finds a non-compete clause overly broad and therefore unenforceable in case where appellees were employed by plaintiff as fugitive recovery agents.

The supreme court has placed further limitations on agreements not to compete. In, SWAT 24 Shreveport Bossier, Inc. v. Bond, 808 So.2d 294 (La. 2001), the court interprets La. R.S. 23:921(C) as permitting an employee to agree with an employer to refrain from carrying on or engaging in his own competing business and from soliciting customers of the employer, subject to certain geographical and time limits. This case abrogates Scariano Bros., Inc. v. Sullivan, 719 So.2d 131 (La. App. 4th Cir. 1998) and Moreno & Assoc. v. Black, 741 So.2d 91 (La. App. 3d Cir. 1999), resolving a split in the circuits. (Traylor dissents). The court, however, finds the impermissibly overbroad provision is severable because the contract contained a severability clause. Action Revenue Recovery, L.L.C. v. eBusiness Group, L.L.C., 17 So. 3d 999, 29 I.E.R. Cas. (BNA) 1505 (La. Ct. App. 2d Cir. 2009).