Many South Carolina employees have signed some version of a non-compete or non-solicit agreement. [Read more: Non-Compete Agreements in SC] Often these types of agreements get placed in front of an employee during the onboarding process, and most of the time, the employee has no opportunity to review the agreement with their lawyer, or even to attempt any negotiation of the specific terms. [Read More: A Non-Compete Consultation for South Carolina Employees] It’s normally a take it or leave it kind of offer, and thus many employees just sign the agreement because they need the job to support their families. Employers take advantage of that fact all the time.
But South Carolina courts have an interesting and sometimes quite impactful way of looking at these types of restrictive covenant agreements. If a company brings a lawsuit against an employee for breach of a non-compete or non-solicit agreement, then the judge—not the jury—has the job of deciding BEFORE TRIAL whether or not the agreement is enforceable as a matter of law. [Read more: The Contents of Non-Compete Agreements for SC Employees]
Elements of an Enforceable Non-Compete Agreement in South Carolina
So what does a judge look at in determining whether a non-compete or non-solicit is enforceable? Well, there are five elements that a court has to examine and decide. (1) Is the agreement supported by valuable consideration (i.e., was the employee paid something of value in exchange for their signature); (2) necessary to protect the employer in some legitimate interest; (3) not unduly harsh and oppressive in curtailing the employee’s legitimate efforts to earn a livelihood; and (4) otherwise reasonable from the standpoint of sound public policy. The agreements must be limited in terms of time and space, which means how many years does it apply to the employee after leaving that job and what geographic territory does it cover.
For example, if you work only in South Carolina, then a non-compete that says you can’t work anywhere in the United States would be overly broad and unenforceable. Or if the company you worked for only did business in the U.S., but the non-compete applies to the whole world, then that would be overly broad. The primary idea is that the non-compete should be limited to the geographic area in which you are able to make contact with the customers of your employer. I’ve seen many, many non-compete agreements that far exceed the area needed to actually protect an employer’s legitimate business interests.
What About Non-Solicit Agreements?
For non-solicitations, the restriction typically needs to be limited to customers or employees that you had contact with. Some companies are huge, global monstrosities that have dozens of subsidiaries all around the world, with customers and employees that might measure in the thousands or tens of thousands.
A narrowly drawn non-solicit would be limited to those customers or employees that you had direct and meaningful contact with. Otherwise, if the company writes the non-compete to include every customer or employee of the company across the world and all subsidiaries, then a South Carolina judge is likely to find the agreement to be overly broad and unenforceable.
Narrowly Drawn Non-Competes Are More Likely to Be Enforceable
I see these types of overly broad agreements all the time when I meet with clients to review their non-competes and non-solicits. But I can also tell when the company has actually gone to the trouble of hiring a good South Carolina employment lawyer to draft up an agreement that is narrowly tailored to best comply with the requirements of state law. Companies that want to do a one-size-fits all agreement to apply to employees across multiple states, countries, and subsidiaries runs the very real risk of having a South Carolina judge throw out the agreement altogether. The narrowly drawn agreement is more likely to be enforced, which makes them far more effective in discouraging employees from violating them. [Read More: Want to See What a Garbage Non-Compete Looks Like?]
So, if you’re facing an employer who’s asking you to sign a non-compete or non-solicit agreement, make sure you contact a South Carolina employment lawyer to have the agreement review BEFORE you sign it. Or, if you’ve already signed and are facing angry and threatening letters from your former employer, speak to a lawyer immediately about your legal options. [Read More: Reviewing SC Non-Compete and Non-Solicit Agreements] Even if the agreement is ultimately unenforceable, a vengeful employer can still file a lawsuit and require you to spend lots of money to defend yourself.
