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Enforcing Covenant Not To Compete Agreements During COVID19

For the past six months, hundreds of thousands of employees across the nation have experienced furloughs or lay-offs; and many are bound to Covenant not to Compete Agreements with their former employers. Non-Compete Agreements have a history of shifts in their use; first they were restricted, then allowed, and shifted to a broad use - which is what we currently see. But with both parties - employers and employees - experiencing loss of revenue and salary reductions during COVID19, the big question is: How are courts enforcing Covenant Not to Compete Agreements?

While this has been an interesting development to observe; we are seeing both courts and businesses take different approaches in the enforcement of them. While courts are still allowing the enforcement of Non-Compete Clauses, but they are conducting more in-depth measures to evaluate the fairness of those agreements. Evaluating some agreements in-depth, it's eye-popping to see the facts ultimately change the outlook of some Non-Compete Agreements.

For example, there is a case in Pennsylvania where a 31-year employee of a sports retailer was furloughed by his employer due to COVID-19. Despite no longer working for the sports retailer, and the employee not having a new position lined up, the sports retailer attempted to enforce the signed Covenant Not to Compete Agreement - further hindering his ability to find a job.

With increased pressure on Business owners, we recommend talking to your business attorney and getting a second look at your Non-Compete Agreements. Certainly while we are still uncertain of the road ahead; it is recommended to prepare for whatever could come next. Our experienced Business Attorney Brandon Grysko can help guide your business through these challenging times, Brandon Grysko can be reached by email or by phone at (248) 912- 3240.

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