Enforcement of restrictive covenants (non-competition/non-solicitation agreements) are not favored in Indiana and are narrowly construed. If overbroad Indiana courts will not rewrite the agreement for the parties and often will declare the provision void and unenforceable in its entirety. These covenants frequently give rise to contentious litigation as both sides tend to believe they have little room for compromise. The employee believes he is being deprived of the right to work and the employer believes that, without protection, its investment in training and experience results in unfair competition by that employee in his or her new employment.
A recent Indiana statute exemplifies its general approach to insisting that restrictive covenants contain terms reasonably calculated to guard protectable interests. Indiana Code § 25-22.5-5.5-1-4 sets out five (5) requirement appliable to newly drafted physician noncompete agreements. We can expect this type of expression of Indiana law and public policy to continue.
Restrictive covenants have a very useful and important place for an employer. But, they must be properly drawn and limited to protecting those rights of the employer to which it has a protectable interest. If drawn too broadly the protection a restrictive covenant can provide may be forfeited. The best approach to drafting such an agreement is to have firmly in mind the employer’s legitimate proprietary interests and drafting the agreement to be reasonably calculated to protect only those interests.
For more information on non-compete agreements and non-solicitation agreements and how they can protect your business or restrict future employment, please contact the attorneys at the law firm of Fine & Hatfield, A Professional Corporation.