[1] http://biz.findlaw.com/source/life_events/le8_5ten.html

Ten Things to Think About: Employment Contract Provisions

Employment contracts take many different forms. All employees at a company may be asked to sign the same form contract, or each employee may have a contract with the employer that is applicable just to his or her employment agreement. An employer and an employee may simply have an oral agreement regarding the kind of work the employee will do, for how long, and at what rate of pay. Sometimes there is no written or oral agreement but the behavior of the employer and the employee can be viewed as an implied employment contract.

Most employment contracts have common elements such as the employee's start date, salary, and benefits. Other provisions that often appear in employment contracts are listed here. You can think about what kind of employment contract is agreeable to you before you sign your next employment agreement. Your attorney can advise you about the pros and cons of agreeing to the various provisions or suggest other terms to include.


CONFIDENTIALITY AGREEMENT. An employee confidentiality agreement is a contract or part of a contract in which the employee promises never to share any information about the details of how the employer's business is conducted, or the employer's secret processes, plans, formulas, data, or machinery used, such as the price the company has charged for its products. Usually a confidentiality agreement lasts even after the employee no longer works for the employer.


NONCOMPETITION AGREEMENT. In the noncompetition clause the employee agrees that for a certain amount of time after he or she stops working for the employer, the employee will not become employed by a rival company or any company engaged in a similar type of business, and the employee will not set up a company that will compete with the employer's business or solicit the employer's customers. Usually the noncompetition clause is limited to a particular geographic area.


OWNERSHIP OF INVENTIONS. This provision applies to employees who invent things as part of their jobs. In this part of the contract the employee agrees that anything he or she invents at work, or during a set period of time after termination, becomes the employer's invention, not the employee's own invention. Additionally, employees usually agree to assign their inventions to the employer, cooperate with the employer in getting inventions patented, and keep information about the invention confidential like any other trade secret. In return, sometimes the employer agrees to share with employee-inventors a percentage of the royalties paid for inventions.


BEST EFFORTS. Although it is often just assumed that the employee will work hard for the employer, sometimes employers add a best-efforts provision to the employment contract. It states that the employee promises to work to the best of his or her ability and to be loyal to the employer. Sometimes it also states that the employee specifically agrees to make suggestions and recommendations to the employer that will be of benefit to the company.


EXCLUSIVE EMPLOYMENT. In this provision, the employee promises that as long as he or she works for the company the employee will not work for anyone else in the same or similar type of business. It may also extend to a promise not to be a shareholder or director in a similar business, or even to provide services voluntarily to a similar or competitor business.


NO ADDITIONAL COMPENSATION. The no additional compensation clause states that if the employee becomes an elected director or officer of the company or serves on a company managing committee, the employee will not be entitled to additional compensation for doing that work.


NO AUTHORITY TO CONTRACT. Sometimes this part of the contract is called the "agency" provision. It makes clear that the employer and employee have an employment relationship only, not an agency relationship; the employee has no right to enter into a contract or otherwise obligate the employer, unless the employer gives express written consent to do so.


TERMINATION. A standard part of any employment contract is the termination clause. It states that either party may terminate the employment contract for any reason by giving a certain amount of notice, such as two weeks' notice. It may also give the employer the right to just terminate the contract without notice if the employee violates the contract in any way. Another aspect of the termination clause is a statement that the employer has the right to terminate the contract if the employee becomes permanently disabled because of ill health or physical or mental disability such that the employee can no longer do the job.


ARBITRATION. Arbitration clauses are found in many types of contracts, including employment contracts. In this provision, the parties agree at the onset of the relationship that if they ever have a dispute about any aspect of the employment relationship, they will submit the dispute to arbitration rather than seek resolution by a court of law. It may include details about the arbitration, such as whether the arbitration decision will be binding and how the parties will find an arbitrator when the time comes.


CHOICE OF LAW. Employment laws vary from state to state. Some states have laws that are generally viewed as more favorable or beneficial to employers than employees or vice versa. This part of the contract is an agreement that if the parties ever have a dispute that results in a lawsuit, it will be governed by the laws of a particular state, no matter where it is filed.
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[2] http://www.uslegalforms.com/lawdigest/legal-definitions.php/US/US-EMPLOYMENT-CONFIDENTIALITY.htm

Employment Confidentiality Law and Legal Definition
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Confidentiality and non-disclosure agreements are used to impose confidentiality obligations on parties receiving information on materials from disclosing parties which consider such information or material to be confidential. Drafting the appropriate contract requires consideration of some key issues. The first challenge is to identify, with particularity, the information which is confidential. There may be limitations on what information is deemed confidential, such as information already known to the signing party, or information made public, through government agency order, etc. The second question focuses on whether you are the party receiving or disclosing such information. The third issue concerns the duration for keeping the information confidential. Finally, consider whether the confidential information also qualifies as a trade secret. Also important is an explanation of the purpose for disclosure, i.e. when confidential information is only revealed to another party for a specific purpose. The agreement should set forth what the purpose is. Other provisions that are commonly found in confidentiality agreements include:
o a provision allowing the remainder of an agreement to stay in effect even if a portion of the agreement is found to be unenforceable,
o a provision stating that the agreement is binding on heirs and assigns,
o a provision calling for a return of confidential materials after use by Recipient,
o a provision stating that the Discloser has the right to receive an injunction from a court if the agreement is breached,
o a provision specifically specifying that the Discloser owns all confidential information,
o a provision specifying that disputes should be arbitrated, and
o a provision governing the controlling law for the contract.
Relevant legal forms include:

Order Regarding Disclosure of Confidential Information only on execution of Confidentiality Agreement
Employment and Confidentiality Agreement
Customer Confidentiality Agreement
Employee Confidentiality and NonCompetition Agreement
Employee Confidentiality Agreement



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[3] http://www.allbusiness.com/forms/asp/231899p.asp

CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT
FOR EMPLOYEE

This CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT (the "Agreement") is made between ____________________ (the "Company") and the undersigned employee.

In consideration of my employment with the Company (which for purposes of this Agreement shall be deemed to include any subsidiaries or Affiliates* of the Company), the receipt of confidential information while associated with the Company, and other good and valuable consideration, I, the undersigned individual, agree that:

Term of Agreement. This Agreement shall continue in full force and effect for the duration of my employment by the Company (the "Period of Employment") and shall continue thereafter as otherwise provided in this Agreement.

Confidentiality.

Definitions. "Proprietary Information" is all information and any idea whatever form, tangible or intangible, pertaining in any manner to the business of the Company, or any of its Affiliates, or its employees, clients, consultants, or business associates, which was produced by any employee or consultant of the Company in the course of his or her employment or consulting relationship or otherwise produced or acquired by or on behalf of the Company. All Proprietary Information not generally known outside of the Company's organization, and all Proprietary Information so known only through improper means, shall be deemed "Confidential Information." By example and without limiting the foregoing definition, Proprietary and Confidential Information shall include, but not be limited to:

formulas, research and development techniques, processes, trade secrets, computer programs, software, electronic codes, mask works, inventions, innovations, patents, patent applications, discoveries, improvements, data, know-how, formats, test results, and research projects;

information about costs, profits, markets, sales, contracts and lists of customers, and distributors;

business, marketing, and strategic plans;

forecasts, unpublished financial information, budgets, projections, and customer identities, characteristics and agreements; and

employee personnel files and compensation information.

Confidential Information is to be broadly defined, and includes all information that has or could have commercial value or other utility in the business in which the Company is engaged or contemplates engaging, and all information of which the unauthorized disclosure could be detrimental to the interests of the Company, whether or not such information is identified as Confidential Information by the Company.

Existence of Confidential Information. The Company owns and has developed and compiled, and will develop and compile, certain trade secrets, proprietary techniques and other Confidential Information which have great value to its business. This Confidential Information includes not only information disclosed by the Company to me, but also information developed or learned by me during the course of my employment with the Company.

Protection of Confidential Information. I will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any third party, other than in my assigned duties and for the benefit of the Company, any of the Company's Confidential Information, either during or after my employment with the Company. In the event I desire to publish the results of my work for the Company through literature or speeches, I will submit such literature or speeches to the President of the Company at least 10 days before dissemination of such information for a determination of whether such disclosure may alter trade secret status, may be highly prejudicial to the interests of the Company, or may constitute an invasion of its privacy. I agree not to publish, disclose or otherwise disseminate such information without prior written approval of the President of the Company. I acknowledge that I am aware that the unauthorized disclosure of Confidential Information of the Company may be highly prejudicial to its interests, an invasion of privacy, and an improper disclosure of trade secrets.

Delivery of Confidential Information. Upon request or when my employment with the Company terminates, I will immediately deliver to the Company all copies of any and all materials and writings received from, created for, or belonging to the Company including, but not limited to, those which relate to or contain Confidential Information.

Location and Reproduction. I shall maintain at my work station and/or any other place under my control only such Confidential Information as I have a current "need to know." I shall return to the appropriate person or location or otherwise properly dispose of Confidential Information once that need to know no longer exists. I shall not make copies of or otherwise reproduce Confidential Information unless there is a legitimate business need of the Company for reproduction.

Prior Actions and Knowledge. I represent and warrant that from the time of my first contact with the Company I held in strict confidence all Confidential Information and have not disclosed any Confidential Information, directly or indirectly, to anyone outside the Company, or used, copied, published, or summarized any Confidential information, except to the extent otherwise permitted in this Agreement.

Third-Party Information. I acknowledge that the Company has received and in the future will receive from third parties their confidential information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree that, during the Period of Employment and thereafter, I will hold all such confidential information in the strictest confidence and not to disclose or use it, except as necessary to perform my obligations hereunder and as is consistent with the Company's agreement with such third parties.

Third Parties. I represent that my employment with the Company does not and will not breach any agreements with or duties to a former employer or any other third party. I will not disclose to the Company or use on its behalf any confidential information belonging to others and I will not bring onto the premises of the Company any confidential information belonging to any such party unless consented to in writing by such party.

Proprietary Rights, Inventions and New Ideas.

Definition. The term "Subject Ideas or Inventions" includes any and all ideas, processes, trademarks, service marks, inventions, designs, technologies, computer hardware or software, original works of authorship, formulas, discoveries, patents, copyrights, copyrightable works products, marketing and business ideas, and all improvements, know-how, data, rights, and claims related to the foregoing that, whether or not patentable, which are conceived, developed or created which: (1) relate to the Company's current or contemplated business or activities; (2) relate to the Company's actual or demonstrably anticipated research or development; (3) result from any work performed by me for the Company; (4) involve the use of the Company's equipment, supplies, facilities or trade secrets; (5) result from or are suggested by any work done by the Company or at the Company's request, or any projects specifically assigned to me; or (6) result from my access to any of the Company's memoranda, notes, records, drawings, sketches, models, maps, customer lists, research results, data, formulae, specifications, inventions, processes, equipment or other materials (collectively, "Company Materials").

Company Ownership. All right, title and interest in and to all Subject Ideas and Inventions, including but not limited to all registrable and patent rights which may subsist therein, shall be held and owned solely by the Company, and where applicable, all Subject Ideas and Inventions shall be considered works made for hire. I shall mark all Subject Ideas and Inventions with the Company's copyright or other proprietary notice as directed by the Company and shall take all actions deemed necessary by the Company to protect the Company's rights therein. In the event that the Subject Ideas and Inventions shall be deemed not to constitute works made for hire, or in the event that I should otherwise, by operation of law, be deemed to retain any rights (whether moral rights or otherwise) to any Subject Ideas and Inventions, I agree to assign to the Company, without further consideration, my entire right, title and interest in and to each and every such Subject Idea and Invention.

California Labor Code (If Applicable). However, Section 3(b) shall not apply if and to the extent that California Labor Code Section 2870 lawfully prohibits the assignment of rights in such intellectual property. I acknowledge that I understand the limits placed on this definition by California Labor Code Section 2870, if applicable to me, which provides:

"Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

Result from any work performed by the employee for the employer.

To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable."

Burden. I understand that I bear the full burden of proving to the Company that an Invention qualifies fully under Section 2870. I agree to disclose promptly to the Company full details of any and all Subject Ideas and Inventions.

Maintenance of Records. I agree to keep and maintain adequate and current written records of all Subject Ideas and Inventions and their development made by me (solely or jointly with others) during the term of my employment with the Company. These records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. These records will be available to and remain the sole property of the Company at all times.

Determination of Subject Ideas and Inventions. I further agree that all information and records pertaining to any idea, process, trademark, service mark, invention, technology, computer hardware or software, original work of authorship, design, formula, discovery, patent, copyright, product, and all improvements, know-how, rights, and claims related to the foregoing ("Intellectual Property"), that I do not believe to be a Subject Idea or Invention, but that is conceived, developed, or reduced to practice by the Company (alone by me or with others) during the Period of Employment and for one (1) year thereafter, shall be disclosed promptly by me to the Company (such disclosure to be received in confidence). The Company shall examine such information to determine if in fact the Intellectual Property is a Subject Idea or Invention subject to this Agreement.

Access. Because of the difficulty of establishing when any Subject Ideas or Inventions are first conceived by me, or whether it results from my access to Confidential Information or Company Materials, I agree that any Subject Idea and Invention shall, among other circumstances, be deemed to have resulted from my access to Company Materials if: (1) it grew out of or resulted from my work with the Company or is related to the business of the Company, and (2) it is made, used, sold, exploited or reduced to practice, or an application for patent, trademark, copyright or other proprietary protection is filed thereon, by me or with my significant aid, within one year after termination of the Period of Employment.

Assistance. I further agree to assist the Company in every proper way (but at the Company's expense) to obtain and from time to time enforce patents, copyrights or other rights or registrations on said Subject Ideas and Inventions in any and all countries, and to that end will execute all documents necessary:

to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection; and

to cooperate with the Company (but at the Company's expense) in any enforcement or infringement proceeding on such letters patent, copyright or other analogous protection.

Authorization to Company. In the event the Company is unable, after reasonable effort, to secure my signature on any patent, copyright or other analogous protection relating to a Subject Idea and Invention, whether because of my physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and on my behalf and stead to execute and file any such application, applications or other documents and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of letters patent, copyright or other analogous rights or protections thereon with the same legal force and effect as if executed by me. My obligation to assist the Company in obtaining and enforcing patents and copyrights for Subject Ideas and Inventions in any and all countries shall continue beyond the termination of my relationship with the Company, but the Company shall compensate me at a reasonable rate after such termination for time actually spent by me at the Company's request on such assistance.

Exhibit. I acknowledge that there are no currently existing ideas, processes, inventions, discoveries, marketing or business ideas or improvements which I desire to exclude from the operation of this Agreement, unless a reference thereto has been attached as an exhibit hereto. To the best of my knowledge, there is no other contract to assign inventions, trademarks, copyrights, ideas, processes, discoveries or other intellectual property that is now in existence between me and any other person (including any business or governmental entity).

No Use of Name. I shall not at any time use the Company's name or any the Company trademark(s) or trade name(s) in any advertising or publicity without the prior written consent of the Company.

Competitive Activity.

Acknowledgment. I acknowledge that the pursuit of the activities forbidden by Section 4(b) below would necessarily involve the use, disclosure or misappropriation of Confidential Information.

Prohibited Activity. To prevent the above-described disclosure, misappropriation and breach, I agree that during my employment and for a period of one (1) year after termination of the Period of Employment, without the Company's express written consent, I shall not, directly or indirectly, (i) employ, solicit for employment, or recommend for employment any person employed by the Company (or any Affiliate); and (ii) engage in any present or contemplated business activity that is or may be competitive with the Company (or any Affiliate) in any state where the Company conducts its business, unless I can prove that any action taken in contravention of this subsection (ii) was done without the use in any way of Confidential Information.

Representations and Warranties. I represent and warrant (i) that I have no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with my undertaking a relationship with the Company; (ii) that the performance of the services called for by this Agreement do not and will not violate any applicable law, rule or regulation or any proprietary or other right of any third party; (iii) that I will not use in the performance of my responsibilities for the Company any materials or documents of a former employer; and (iv) that I have not entered into or will enter into any agreement (whether oral or written) in conflict with this Agreement.

Termination Obligations.

Upon the termination of my relationship with the Company or promptly upon the Company's request, I shall surrender to the Company all equipment, tangible Proprietary Information, documents, books, notebooks, records, reports, notes, memoranda, drawings, sketches, models, maps, contracts, lists, computer disks (and other computer-generated files and data), any other data and records of any kind, and copies thereof (collectively, "Company Records"), created on any medium and furnished to, obtained by, or prepared by myself in the course of or incident to my employment, that are in my possession or under my control.

My representations, warranties, and obligations contained in this Agreement shall survive the termination of the Period of Employment.

Following any termination of the Period of Employment, I will fully cooperate with the Company in all matters relating to my continuing obligations under this Agreement.

In the event that I leave the employ of the Company I hereby grant consent to notification by the Company to my new employer about my rights and obligations under this Agreement.

Upon termination of the Period of Employment, I will execute a Certificate acknowledging compliance with this Agreement in the form reasonably provided by the Company.

Injunctive Relief. I acknowledge that my failure to carry out any obligation under this Agreement, or a breach by me of any provision herein, will constitute immediate and irreparable damage to the Company, which cannot be fully and adequately compensated in money damages and which will warrant preliminary and other injunctive relief, an order for specific performance, and other equitable relief. I further agree that no bond or other security shall be required in obtaining such equitable relief and I hereby consent to the issuance of such injunction and to the ordering of specific performance. I also understand that other action may be taken and remedies enforced against me.

Modification. No modification of this Agreement shall be valid unless made in writing and signed by both parties.

Binding Effect. This Agreement shall be binding upon me, my heirs, executors, assigns and administrators and is for the benefit of the Company and its successors and assigns.

Governing Law. This Agreement shall be construed in accordance with, and all actions arising under or in connection therewith shall be governed by, the internal laws of the State of __________ (without reference to conflict of law principles).

Integration. This Agreement sets forth the parties' mutual rights and obligations with respect to proprietary information, prohibited competition, and intellectual property. It is intended to be the final, complete, and exclusive statement of the terms of the parties' agreements regarding these subjects. This Agreement supersedes all other prior and contemporaneous agreements and statements on these subjects, and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to myself and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control unless changed in writing by the Company.

Employment at Will. This Agreement is not an employment agreement. I understand that the Company may terminate my association or employment with it at any time, with or without cause, subject to the terms of any separate written employment agreement executed by a duly authorized officer of the Company.

Construction. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party. By way of example and not limitation, this Agreement shall not be construed against the party responsible for any language in this Agreement. The headings of the paragraphs hereof are inserted for convenience only, and do not constitute part of and shall not be used to interpret this Agreement.

Attorneys' Fees. Should either I or the Company, or any heir, personal representative, successor or permitted assign of either party, resort to legal proceedings to enforce this Agreement, the prevailing party (as defined in California statutory law) in such legal proceeding shall be awarded, in addition to such other relief as may be granted, attorneys' fees and costs incurred in connection with such proceeding.

Severability. If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.

Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either the Company or me (or by that party's successor), whether pursuant hereto, to any other agreement, or to law, shall not preclude or waive that party's right to exercise any or all other rights and remedies. This Agreement will inure to the benefit of the Company and its successors and assigns.

Nonwaiver. The failure of either the Company or me, whether purposeful or otherwise, to exercise in any instance any right, power or privilege under this Agreement or under law shall not constitute a waiver of any other right, power or privilege, nor of the same right, power or privilege in any other instance. Any waiver by the Company or by me must be in writing and signed by either myself, if I am seeking to waive any of my rights under this Agreement, or by an officer of the Company (other than me) or some other person duly authorized by the Company.

Notices. Any notice, request, consent or approval required or permitted to be given under this Agreement or pursuant to law shall
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[4] http://library.lp.findlaw.com/articles/file/00335/002839/title/Subject/topic/Employment%20Law_Non-compete%20Agreements/filename/employmentlaw_1_476

http://library.lp.findlaw.com/articles/file/00335/002839/title/Subject/topic/Employment%20Law_Non-compete%20Agreements/filename/employmentlaw_1_476

Noncompetition Agreements--New Trends and Old Dilemmas

Onebane Bernard Torian Diaz McNamara & Abell
By Steven C. Lanza

From a litigation standpoint, it seems that noncompetition agreements have recently eclipsed almost every other type of contract executed in the employer-employee context. New judicial pronouncements and interpretations of the operative statute, La. R.S. 23:921, have become quite frequent.

By way of background, La. R.S. 23:921 was revised in 1989 to substantially read as follows with respect to the employer-employee relationship:


A. Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void.

. . .
C. Any person, including a corporation and the individual shareholders of such corporation, who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.

The 1989 amendment to La. R.S. 23:921 did not change Louisiana public policy against noncompetition agreements - they are still against public policy. Nonetheless, the legislature has created certain specific statutory exceptions to the general prohibition. In amending La. R.S. 23:921, the Louisiana Legislature expanded the use of noncompetition agreements and, subject to compliance with the exceptions, further recognized that employers have a right to protect their business investments. Although the trend in Louisiana jurisprudence has apparently changed during the past two to three years, traditionally any contract which did not fit exactly within one of the statutory exceptions would be declared null and void.

There are two significant issues that recently have been litigated in Louisiana appellate courts: (i) whether a noncompetition agreement must describe the employer's business operations in order to be valid and enforceable; and (ii) whether an otherwise invalid noncompetition agreement (because of excessive or inadequate geographic area descriptions) can be reformed or severed in order to make the agreement valid and enforceable.

Definition of the Employer's Business

Louisiana jurisprudence is divided on whether a noncompetition agreement must accurately define the business of the employer from which the employee will be prohibited from competing. A survey of the Louisiana appellate circuits with regard to this issue shows the following:

LaFourche Speech & Language Services, Inc. v. Juckett, 652 So.2d 679 (La. App. 1st Cir. 1995). The court held that, in order to be valid, a noncompetition agreement must specifically define the employer's business.


Moores Pump and Supply, Inc. v. Laneaux, 727 So.2d 695 (La. App. 3rd Cir. 1999). The court held that a specific description of an employer's business is not required by La. R.S. 23:921.


Henderson Implement Co., Inc. v. Langley, 707 So.2d 482 (La. App. 3rd Cir. 1998). The court found that La. R.S. 23:921 does not require that a noncompetition agreement include a definition of the employer's business.


Scariano Bros., Inc. v. Sullivan, 719 So.2d 131 (La. App. 4th Cir. 1998). The court found there is no statutory requirement to define the employer's business in the noncompetition agreement; provided, however, that any injunction issued which prohibited competition by the former employee must describe in reasonable detail the acts sought to be restrained.


Daquiri's III on Bourbon, Ltd. v. Wandfluh, 608 So.2d 222 (La. App. 5th Cir. 1992). The court found that, to comply with Louisiana law, the noncompetition agreement must specifically define the employer's business. The noncompetition agreement at issue was found invalid, in part, because it contained an overly broad definition of the employer's business.

Ultimately, in light of the difference of opinion in the various Louisiana appellate circuits, it will be up to the Louisiana Legislature or the Louisiana Supreme Court to determine whether a noncompetition agreement must properly define an employer's business in order to be valid and enforceable.

Can a Court Reform or Sever Objectionable Provisions in a Noncompetition Agreement in Order to Make It Valid and Enforceable?

The second and possibly more important issue which has been the subject of recent appellate decisions involves whether overly broad or objectionable provisions in noncompetition agreements can be reformed or severed by the courts in order to preserve the agreement's validity and enforceability.

Until quite recently, Louisiana courts did not permit an invalid or over broad noncompetition agreement to be reformed down, or its objectionable provisions to be severed, in order to permit the agreement to fall within the permissible scope of La. R.S. 23:921. An employer's inclusion of a "savings clause"-to the effect that if any provision in the contract was declared over broad said provision would be interpreted only to bind the employee to the maximum extent provided by law-has traditionally been found ineffective to save an invalid noncompetition agreement.

The traditional view was based on the fact that to allow reformation of an invalid noncompetition agreement (i) would run counter to the requirement of strict and narrow construction of the statute; (ii) would allow ambiguous noncompetition agreements and a degree of uncertainty as to the validity and scope of what an employee had agreed to; and (iii) would place courts in the business of either saving the contract or actually taking the responsibility of rewriting a contract that is not generally favored by Louisiana law.

During the last two to three years, however, Louisiana courts have increasingly permitted reformation and/or severance of contractual provisions in order to allow invalid noncompetition agreements to regain validity and enforceability. A summary of the cases which have initiated the new trend is as follows.

Amcom of Louisiana, Inc. v. Battson, 666 So.2d 1227 (La. App. 2nd Cir. 1996), rev'd, 670 So.2d 1223 (1996). The noncompetition agreement at issue described the prohibited geographic area as follows: "Shreveport or Bossier City, Louisiana, or in Caddo or Bossier Parishes, Louisiana, or within a seventy-five mile radius of Shreveport or Bossier City, Louisiana." The trial court found that, although the radius based element of the geographic area description was overly broad, this objectionable element could be stricken from the agreement, thereby leaving the noncompete to apply in the specified parishes (Caddo and Bossier). The Second Circuit rejected the trial court's reformation/severance of the objectionable geographic element and found the entire agreement unenforceable since it did not precisely comply with the geographic specificity required under the law. The Louisiana Supreme Court, without articulation of its reasons, reversed the Second Circuit decision and reinstated the trial court's ruling, thereby tacitly sanctioning the permissibility of reforming invalid noncompetition agreements and/or severing objectionable elements thereof.


Dixie Parking Service, Inc. v. Hargrove, 691 So.2d 1316 (La. App. 4th Cir. 1997). The court declared valid a noncompetition agreement which described the prohibited geographic area as "the Louisiana parishes set forth in a schedule attached to the Non-Competition Agreement, and within any parishes in which Dixie conducted business at the time of [the employee's] termination." The court deleted the nine parishes listed in the exhibit using the severability clause in the agreement and applied the agreement to Jefferson and Orleans parishes, which were the parishes where the employer operated its business at the time of the termination of the employee's employment.


Henderson Implement Co., Inc. v. Langley, 707 So.2d 482 (La. App. 3rd Cir. 1998). The court found that La. R.S. 23:921 permits reformation of a noncomplying provision contained in a noncompetition agreement. The court opined that such conclusion was supported even if the noncompetition agreement did not contain a savings or severability clause.


Moreno and Associates v. Black, 1999 La. App. LEXIS 1308 (La. App. 3rd Cir. 1999). The noncompetition agreement at issue listed the geographic territory as 24 specified parishes in Louisiana, two specified counties in Texas, and all oil and gas drilling or production platforms, rigs, or related entities located in the Gulf of Mexico outside of the boundaries of Louisiana and Texas. The court found this geographic area to contain some "unenforceable features," but held that the objectionable references could be severed (pursuant to the agreement's severability clause), leaving the balance of the contract enforceable.

It seems the trend to allow reformation and/or severance of objectionable provisions contained in noncompetition agreements is one that is here to stay. This development is of great benefit to employers who, prior to this judicial development, were only rarely finding their noncompetition agreements upheld by Louisiana appellate courts.

One thing is certain, the law - as it relates to noncompetition agreements in Louisiana - will continue to develop as each new appellate case is decided. Anyone interested in tracking the progress of this rapidly changing area of law will undoubtedly have a great deal to observe in the coming months.

Employment Law