How one word determines the success or failure of a non-compete agreement

One word. One word in a document that often contains thousands of words will determine whether your employment contract is enforceable or not. This principle applies whether it is the employer or the employee. What is that one word? It is Oklahoma, Texas, Pennsylvania or any other state. The word is the law of the state that controls the employment agreement.

An employment agreement usually provides something like “the laws of the State of [__________________] shall control this Agreement”. That means the parties to the agreement are choosing a particular state’s law to control how the agreement is interpreted. If both employer and employee are in the same state, the issue isn’t that significant. But when an employer has multi-state locations, the decision of which state’s law will apply is critical.

Consider the non-compete agreement. This clause typically prohibits an employee from working in any business that competes with a previous employer. Most non-compete restrictions are broad and have the effect of shutting off an employee’s option of working in a particular industry. Non-compete restrictions are, however, not treated the same in every state. For example, an Oklahoma non-compete agreement is essentially void except for a few limited circumstances. But in the state of Pennsylvania, the law is much different and probably would allow most reasonable non-compete agreements.

It all comes down to that one word: Is it Oklahoma or Pennsylvania? The answer will likely determine whether the non-compete agreement is enforceable or unenforceable. Be careful in the words you choose when negotiating and signing a contract. If you need any help, please contact me because I deal with these issues on a daily basis.