Brief Fact Summary.
Syncom Industries, Inc. (Syncom) sued Wood and Hogan for breach of a non-solicitation employment agreement when both parties obtained business from several Syncom customers after leaving employment with Syncom.
Synopsis of Rule of Law.
Contracts that restrain competition are valid and enforceable if the restraint is reasonable.
In determining whether such restriction is reasonable, the court will look alone to the time when the contract was entered into.View Full Point of Law
Wood worked for Syncom Industries, Inc. (Syncom) and entered into a non-compete and non-solicitation employment agreement. Hogan also worked for Syncom and entered into a similar agreement. The non-solicitation agreement prevented both employees from soliciting Syncom employees three years after leaving Syncom. The provision also prohibited Wood and Hogan from working for any company that would solicit business from any of Syncom’s customers. Syncomsued Wood and Hogan for breach of a non-solicitation employment agreement when both parties obtained business from several Syncom customers after leaving employment with Syncom. The trial court granted judgment to Syncom.
Whether contracts that restrain competition are valid and enforceable if the restraint is reasonable?
Yes. The judgment of the trial court is reversed in part and affirmed in part. The restrictive covenants in the employment agreements were overbroad because the covenants applied to each customer regardless of whether or not Hogan or Wood interacted with the customer in the course of employment.
There is a three-prong test to determine whether a restraint is reasonable: (1) The restriction should not be greater than what is needed to protect the interests of the employer; (2) the restriction shouldn’t place undue hardship on the employee; (3) the restriction should not injure the public interest.