However, Indiana employees should remember that they may still have options available even if they unknowingly sign non-compete clauses, especially if those agreements are deemed unenforceable by law. In general, I tell people to assume that their non-compete obligations are enforceable and not to sign them unless they can live with the restrictions. But an employee who has the time, willingness, and resources to fight can often limit or eliminate their non-compete obligations. If there is a non-compete obligation in your separation agreement that is effectively enforceable, your employer can take legal action against you for breach of your contract. You can claim financial damages or, more commonly, an injunction. That is, if the court confirms the contract, the employee must leave his new employer and continue to follow the terms of the agreement. Heraeus Med., LLC v. Zimmer, Inc. The case involved an agreement signed by an employee named Kolbe that included non-competition and non-competition and non-solicitation for Zimmer Surgical`s customers and employees. Kolbe first worked as a regional group leader for Zimmer, Inc., which manufactured and sold bone cements. Zimmer had a subsidiary (Zimmer Surgical) with exclusive distribution rights to heraeus Medical`s bone cements.
Kolbe quit his job at Zimmer after a few years and accepted a position as vice president of sales at Heraeus Medical, planning to sell bone cements from Heraeus Medical. Heraeus Medical terminated the distribution agreement with Zimmer Surgical and became a direct competitor of Zimmer. In response, Zimmer filed a lawsuit to enforce Kolbe`s non-compete and non-solicitation clause. By the way, the same provisions can be found in independent contractor agreements and agreements on the sale/purchase of a business, both in share purchase and asset purchase contracts. However, the analysis of contractor and company purchase agreements is different from how the courts review agreements that affect employees. In this article, we discuss Indiana`s non-compete obligations and answer the following questions: Depending on the language of your non-compete code, you may be able to challenge the appropriateness of the terms. For example, Indiana courts have held that non-compete obligations that restrict competitive activity for a period of two years after separation are appropriate. If your non-compete obligation is longer, you may have reason to challenge it. Similarly, if a non-compete obligation prevents an employee from doing business throughout the state, but the employer only does business in the Indianapolis area, there may be a reason to challenge it.
Geographical area: The geographical area of a non-compete obligation must be appropriate to the area in which the company operates in order to be enforceable. A good rule of thumb is that the restriction extends to the immediate area where the business usually does business, and perhaps beyond when the business is expanding. This can become complicated for companies operating across the country or abroad, and for employees who travel regularly. Ultimately, the courts must balance the legitimate interests of the company against the possible difficulties of the employee. To protect their proprietary information and protect good employees from theft, Indiana employers are increasingly requiring their employees to sign non-compete agreements. The non-competition clause gives employers a degree of certainty that an employee who has developed considerable skills and acquired valuable knowledge during the course of his or her employment will not leave or compete directly with the company. However, many non-compete obligations are severe and exaggerated, which significantly stifles a person`s ability to move freely within their profession and pursue potential career opportunities. As a result, such agreements are regularly challenged in court. But how do we determine whether a non-competition clause violates the rights of our workers? Second, is the scope of the non-compete obligation appropriate? It must be limited in location, time and type of activity. Forcing an employee from some surrounding counties to quit their job completely for a year might be reasonable. But it is easy to imagine that an incomplete ban on work will take place in periods of enormous time, huge industries and vast territories.
People have to work, but most importantly, these kinds of restrictions generally do not protect an adequate business interest. A medical sales representative signed a non-compete agreement when he joined a medical device company. He then hired a second medical device company as vice president, and then hired several employees from the first company. This violated their previous agreement with the employee. The first step in determining the enforceability of a non-compete obligation is to determine whether or not the company has a protected interest. This may sound vague, but there are two categories that are generally considered protected commercial interests: a “blue pencil” clause in a restrictive pact is a reform clause that empowers a court to amend (reform) treaty provisions that are unenforceable because those provisions are too broad. Thus, the Court of Appeal made the Zimmer-Kolbe agreement enforceable, adding that “the wording limits the scope of the agreement only to employees in whom [Zimmer] has a legitimate and protectable interest.” Heraeus Medical was not satisfied with this decision and asked the Indiana Supreme Court for a transfer, overturning the Appeals Court`s decision. .
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