Our first post - On bodybags and non-competes
DISCLAIMER: Here’s our first blog post. You probably already know this, but you can’t become DuRant & DuRant, P.A.’s client by reading anything (including a blog). This blog doesn’t constitute legal advice. Every situation is different. If you want legal advice about your unique issues, contact a lawyer.
You’re likely familiar with non-competes in employment contracts, where (if appropriately drafted) employees can be restricted from working for competitors after their employment’s end. Some background: to enforce a non-compete, you must show that it was supported by valuable consideration, that it is not detrimental to the public interest, that it is ancillary to the sale of a business or profession, and that time and territory restrictions are reasonable.
A case decided last month—Palmetto Mortuary Transport, Inc. v. Knights Systems Inc., Op. No. 27833—teaches that non-competes are viewed more favorably outside the workplace. There, South Carolina’s Supreme Court stated that: “Non-compete covenants executed in conjunction with the sale of a business should be scrutinized at a more relaxed level than non-compete covenants executed in conjunction with employment contracts.” But those same covenants are “generally disfavored” in the employment context and are “strictly construed against an employer.” The reason? On balance, employers hold most of the chips in the job-application process. The odds are closer to even when two sophisticated businesses meet at the table.
Not to say that courts will accept any non-compete carte blanche. The Palmetto Mortuary Court considered the non-compete along with the rest of the asset-purchase agreement and the nature of the mortuary-transport business being bought. The case turned, in part, on whether the non-compete’s 150-mile scope was reasonable. The Court of Appeals found that it wasn’t because the business didn’t have concrete plans to expand. But the business wasn’t brick-and-mortar, so the Supreme Court found that concrete plans weren’t required. Transportation requires mobility, so expansion was foreseeable.
If you own a business, it’s important to consider these distinctions before a deal turns sour or your employee leaves you for a competitor. DuRant & DuRant, P.A. can help with that. Foresight goes a long way here. If litigated, overbroad non-competes are dead on arrival. They aren’t worth the paper they’re printed on. To that end, we also help people who are trying to determine whether their employer can put them out of work. Call to schedule a consultation today.
DuRant & DuRant, P.A. is located at 2107 Farlow Street, Myrtle Beach, South Carolina 29577. Frank DuRant is a South Carolina lawyer with over forty years of experience. Julian DuRant graduated first in his class at Wake Forest University Law School and can practice in both South and North Carolina.