Did you sign a “back-door” Oklahoma non-compete?

February 15, 2013

Oklahoma non-compete law in the employment setting remains crystal clear: Non-competes are unenforeceable except in a couple of narrowly defined circumstances. That doesn’t mean some people won’t continue to try to accomplish indirectly what cannot be done directly.

This is where the back-door non compete comes in. What is a back-door noncompete?

It is a contract clause that despite not expressly limiting the former employee from working, effectively creates a market so small, it is like being prohibited from competing. Consider this example:

Employee covenants and agrees that during the period of time while employed by SMITH CO, and for a period of two years after the date of termination of such employment, whether voluntarily or involuntarily, with or without cause, the Employee shall not directly or indirectly render widget-making services of any type, including, but not limited to, traditional and Internet, to any person or entity, that during the 24-month period
immediately prior to Employee’s termination of employment with SMITH CO:

 

  1. SMITH CO provided any services to such person or entity;
  2. SMITH CO offered to provide any services to such person or entity; and/or
  3.  Such person or entity requested SMITH CO to pitch or bid to provide any services.

Notice of a couple of things:

➜at first glance while the former employee is limited from providing certain services, the limitation appears to be itself limited.
➜however, the limitation is written so broadly that it could apply to nearly every customer or potential customer the former employee would encounter.
➜while the employee can open a business, she simply can’t talk with most of the universe of customers that might be natural prospects.

This is the back-door non-compete. Beware.

Shawn Roberts

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I write about and try to answer practical Oklahoma legal questions. I tend to focus on estate planning and business issues. I make a living as an attorney working for Resolution Legal Group in Oklahoma City. I am husband to Amy and the father of Sam and David. We live exactly in the path where the "wind comes sweeping down the plains."

One response to Did you sign a “back-door” Oklahoma non-compete?

  1. Thank you Suzie, I appreciate you reading the blog!

    Shawn