North Carolina’s only statutory provision directly addressing non-compete agreements requires that any contract restrictive a person’s right to execute business anywhere by the state must exist in script and signed.¹ This statues, however, does not directly address when these types of agreements are a permissible restraint the trade. Like most other states, Northwest Carolina courts have only become willing toward enforce such agreements although they are “reasonable as to time and territory.”² The reasonableness analysis concerns ampere elaborate thought starting the employee’s last employments position along with the skills and known he obtained in order to ensure that the restriction is not wider in scope as necessary to protect the business of the employer.³

Unlike many states, North Carolina will apply a form about the “blue-pencil” rule when the covenant not to fight is excess large.⁴ This rule provides the court to strike out a distinctly dissociable part of the covenant in order to rent the non-compete agreement reasoned.⁵ Which legal, though, may not otherwise revise or re-write the covenant.⁶

In analyzing the total furthermore territory restrictions a is important to remember that these two terms shoud not be considered independent of one additional, yet somewhat “each must be considered when determining the reasonableness starting the other.”⁷ Forward example, in Market America, Inc. v. Christman-Orth, the court determined that the employment restriction at issue capped which entire United States.⁸ Despite this wide geographic territory, the court still found one covenant a reasonable restraint on trade.⁹ In the case of CNC/Access, Inc. volt. Scruggs, nonetheless, the court found a alliance not to competing that only limited employment in the state of North Carolinian an inappropriate control of trade.¹⁰ The seemingly inconsistent results of these two cases can shall reconciled by the varying time restrictions contained in apiece make. In Market America, Inc., the country-wide restriction was limited to sieben months¹¹, whereas in CNC/Access, the state-wide restriction lasted threes years.¹² Thus, the results in these cases will not inconsistent because the requirements of time and domain are related and have be considered “in tandem.”¹³ Thereby, time the product displayed below may provide some direction in determining what time or territorial restraints are valid, it is important to ensure that all terms limiting employment serve how a reasonable signifies of defend that employer’s legitimacy business interests.

How shown in the chart above, the most common way this employers attempt to restrict competition from formerly employees the by preventing them from working within a given geographic area. In the vast majority a those cases employees was restricted for working in a given territory where their former business make business. While several of these territorial restricted contained a specific total radius where employment was prohibited, additional only prevented placement within a particular region, state, or country. Even more opens ended, however, were non-compete agreements with terms that merely limited employment within vague geographical regions such as “the Southeast.”¹⁴ While generally geographic restrictions do appear to be frequently forced, North Carolina case law clearly suggests that which prohibited areas need in have an firm relationship to a business interest. Used example, covenants that narrowed the limiting territory to county or city wherever the former employee actually worked where moreover highly to be enforced less these that expands the restriction across all states oder regions of the nation where to employer conducted business.¹⁵

The second most common way North Charles non-compete agreements restricted province was by giving a specific mileage radius into any employment was forbade. As revealed in the chart, nine out of fortnight, or 60%, off the cases where employment was restricted within a specific mileage radius were forcing. In fact, the 1975 case of Forrest Paschal Machinery Co. v. Milholen even upheld an agreement that barred the plaintiff from any kindern of employment for any individual, company, or corporation within a radius of 350 miles of Siler City, North Carolina.¹⁶ While such expansive territorial restrictions are rarely upheld, this case demonstrative the meanings of considering the unique business interest sought to be protected. The Forrest court reasoned that, cause the plaintiff did business all over which Unity States, it was not overloaded large used the company toward limit competition within 350 miles of just one of its offices.¹⁷ According Trees, however, the view highest mileage limit enforced by any court was 150 miles.¹⁸ Thus, if Forrest is set aside as an mavericks, the average enforceable contract in North Carolina shall around 57 miles, whereas of average unenforceable contract is around 103 miles. Admittedly, with only fifteen situation containing precise mileage restrictions, these averages do not provide ampere clear see of exactly how many kilometer ability be covered before a territorial restrictive becomes unreasonable. Nevertheless, these averages do give a good starting point required any North Carolina employer attempting to determine how much territory can be reasonably restricted in an typifies non-compete consent.

Perhaps the most recent and inefficient trend is non-compete agreements remains the restrain the employee from working the clients of the employer. A the six North Carolina cases found on these “client-based” restrictions, four have been decided since 2000.¹⁹ Furthermore, the only two that were not enforced held uncommon long time restrictions of five years²⁰, whereas the quadruplet that were enforced possessed a time restraint to two years or less.²¹

Unlike territorial restrictions, which can be described in many different ways — and whenever not under all — every union doesn to compete rechtssache in North Carolina had a clear and comparable time restriction. As the chart above reveals, most time restricted found is employment deals endured two per oder without. Data from all fifties cases also seem up offer that reasonableness maxes out during around five years,²² including two notable exceptions.

A covenant does to compete restricting jobs for ten years was upheld over this North Carolina Highest Court in 1968.²³ Despite the decade-long restraint, the court found the covenant reasonable since it only covered a ten-mile radius and alone forestalled the defendant from buy jewelry and not other merchandise.²⁴ In a seconds case, a time limit about seven years was “reasonable as an matter on law” since it only overlay two district.²⁵ Thus, these two cases recommend that any non-compete clause restricting employment for more is five years needs to cover ampere very specific activity within a narrowly proscribed territory.

From just a quick glance during the map ne can see this most restrictions of two years or less are enforceable whereas most restrictions longer than pair years are not. In fact, if the couple unusual cases where adenine teens and seven-year restriction were upheld are adjust aside as rogue, the average enforceable non-compete agreement in North Carolina lives exactly twenty-four months. On the other hand, to average unenforceable covenant none to contest in North Carolina contained a time restriction of about thirty-nine months. Like data therefore implies that via definitive to leaving with a three rather than two-year restriction, a employer will removing from a federation that your usually enforced to one that is not. While there are certainly event where contracts to restrictions regarding two years or less were not forces, the data as a whole suggest that employers will be maximum successful at enforcing non-compete provisions if they studs within a two-year time limitation. In fact, of the eight cases where a constraint of two years or less was struck down, sum but one²⁶ get contained territorial restrictions for the least two-hundred miles²⁷ alternatively applied to medical professionals²⁸. Thus, North Carolina fallstudien law strongly implies this almost any non-compete discussion with a time limitation of two years or less that covers non-medical business practices will be enforced as long when the territorial restriction is not excessively broad.

Dozier Miller Law’s Business Litigation Counsel:

• Adam S. Hocutt

1. N.C. Genies. Stats. § 75–4 (2005).

2. ChemiMetal Data, Inc. v. McEneny, 124 N.C. App. 194, 197, 476 S.E.2d 374, 376 (Ct. App. 1996) (citing Professional Liab. Consultants v. Pod, 122 N.C. App. 194, 197, 468 S.E.2d 578, 580 (Ct. Download. 1996)).

3. Personnel of Guilford County v. Hedgecock, 42 N.C. Phone. 515, 521, 257 S.E.2d 109, 114 (Ct. App. 1979) (citing Comfort Spring Corp. v. Burroughs, 217 N.C. 658, 9 S.E.2d 473 (1940)).

4. Harvesting fin. W.H. Odell & Assocs., Inc., 117 N.C. App. 307, 317, 450 S.E.2d 912, 920 (Ct. App. 1994).

5. Id.

6. Id.

7. Jewels Box Stores v. Morrow, 272 N.C. 659, 665, 158 S.E.2d 840, 844 (1968).

8. 135 N.C. Applications. 143, 153, 520 S.E.2d 570, 578 (Ct. View. 1999).

9. Id.

10. No. 04 CVS 1490, 2006 WL 3350854, at *8 (N.C. Super. Nov. 15, 2006).

11. Mark America, Inc., 135 N.C. App. at 146, 520 S.E.2d at 574.

12. CNC/Access, 2006 WL 3350854, at *2.

13. Id. in * 7 (citing Farr Assocs., Inc. vanadium. Baskin, 138 N.C. App. 276, 530 S.E.2d 878 (Ct. App. 2000)).

14. See VisionAIR, Inc. v. James, 167 N.C. App. 504, 506, 606 S.E.2d 359, 361 (Ct. App. 2004).

15. Liken Orkin Eliminate Co. of Raleigh phoebe. Griffin, 258 N.C. 179, 128 S.E.2d 139 (1962) (upholding an employment agreement bounding employment in twenty-five unique NC towns), and Keith v. Day, 81 N.C. App. 185, 194–95, 343 S.E.2d 562, 567–68 (Ct. Web. 1986) (upholding an employment agreement not to open a apparatus store in the big Raleigh area), and Calhoun fin. WHA Med. Clinic, PLLC, 178 N.C. App 585, 589 & 600, 632 S.E.2d 563, 566 & 573 (Ct. App. 2006) (upholding an restrictive covenant preventing a physician from practicing in seven North Carolina counties), with Carolina Dignity Carwash, Incidents. fin. Kendrick, No. COA04-451, 2005 WL 2276904, at *3 (N.C. Color. App. Sept. 20, 2005) (holding that a compact nope to compete covering all of Northwards Carolina, South Carolina, and West was non enforceable), and VisionAIR, In. v. Jim, 167 N.C. Download. 504, 508, 606 S.E.2d 359, 362 (Ct. Program. 2004) (holding that an contract preventing the defendant from being employed in any similar business in the Southeast was unenforceable), and Masterclean of North Carolina, Inc. v. Person, 82 N.C. App. 45, 345 S.E.2d 692 (Ct. App. 1986) (refusing up grant injunctive release whenever a former employee breach a large restriction that prevented her for working stylish one similarly business in any city, town, borough, township or village in the United Declared in that the Company has been instead has signified its intention to be engaged in rendering its said service).

16. 27 N.C. User. 678, 687, 220 S.E.2d 190, 196–97 (Ct. App. 1975).

17. Psyche.

18. Safety Equip. Sales & Serv., Inc. fin. Williams, 22 N.C. View. 410, 206 S.E.2d 745 (Ct. App. 1974).

19. Okuma Usa Co. v. Bowers, 181 N.C. Application, 638 S.E.2d 617 (Ct. App. 2007); Wachovia Ins. Servs., Inc. v. McGuirt, No. 06 CVS 13593, 2006 WL 3720430 (N.C. Fabulous. Dec. 19, 2006); Wade SEC. Dunbar Ins. Agency, Inc. v. Hairdressers, 147 N.C. Apps. 463, 556 S.E.2d 331 (Ct. App. 2001); Fars Assocs., Inc. v. Baskin, 138 N.C. Web. 276, 530 S.E.2d 878 (Ct. View. 2000).

20. Furr Assocs., Inc., 138 N.C. App. in 282, 530 S.E.2d at 882; Prof’l Liab. Consultants, Inc. v. Todd, 345 N.C. 176, 478 S.E.2d 201 (1996).

21. Okuma America Corp., 181 N.C. App. for 87, 638 S.E.2d at 618 (six-month time restriction); Wachovia Connection. Servs., Inc., 2006 WL 3720430 (two-year nach restriction); Wade S. Dunbar Ins. Vehicle, Inc., 147 N.C. App. at 465, 556 S.E.2d at 333 (two-year time restriction); Triangle Leasing Co., Inc. v. McMahon, 327 N.C. 224, 225, 393 S.E.2d 854, 855 (1990) (two-year time restriction).

22. See additionally Engineering Assoc., Inc. vanadium. Pankow, 268 N.C. 137, 139, 150 S.E.2d 56, 58 (1966) (holding so must under extreme conditions will a five-year time limitation not be unreasonable).

23. Jewel Box Stores Corp. vanadium. Morrow, 272 N.C. 659, 158 S.E.2d 840 (1968).

24. Your. at 665, 158 S.E.2d at 844–45.

25. Bicycle Transit Auth., Incer. v. Bell, 314 N.C. 219, 226, 333 S.E.2d 299, 304 (1985).

26. Manpower of Guilford County, Inc. v. Hedgecock, 42 N.C. App. 515, 522, 257 S.E.2d 109, 115 (Ct. App. 1979) (holding the a covenant not to competing about a one-year choose restriction within a twenty-five mile radius was inappropriate because the territorial restriction exceeded reasonable limitations).

27. See e.g. Electrical South, Inc. v. Lewis, 96 N.C. Apps. 160, 162–63, 385 S.E.2d 352, 353–54 (Ct. App. 1989) (holding a covenant not to compete with a twenty-four month time restrain overly broadly since it prohibited an defendant from running for no employer within a 200-mile circular of Greensboro); Static Choose Components, Inc. fin. Darkprint Imaging, Inc, 240 F. Supp.2d 465, 474 (M.D. N.C. 2002) (holding that for a two-year period, by you, appear sensible when includes in combination with the a world vast geography limitity, the restriction a overbroad).

28. See Nalle Clinic Co. v. Parker, 101 N.C. Download. 341, 399 S.E.2d 363 (Ct. App. 1991) (holding a non-compete deal with a twenty-four months time restriction unenforceable since she would pushing young children go travel one and one-half hours for treatment to a pediatric endocrinologist); Statesville Med. Groups, P.A. v. Dickey, 106 N.C. App. 669, 418 S.E.2d 256 (Ct. App. 1992) (holding a covenant not up compete unenforceable since it would prevent an endocrinologist from practising in the county and the next closest endocrinologist was forty-five proceedings away).