Non-Compete Agreements Must Be Reasonable

A recent decision from the North Carolina Court of Appeals underscores an important rule for non-compete agreements: they must be carefully drafted, reasonable, and tied to a legitimate business interest to be enforceable.

In Southeastern Regional Physician Services v. Scott, the Court reviewed restrictive covenants signed by two nurse practitioners. After the individuals left employment, the non-compete provisions prohibited them from “engaging in the practice of Medicine” or providing similar services.

Why the Court Found the Non-Compete Unenforceable
The Court held the restrictions were overly broad and too restrictive—meaning they went further than North Carolina law allows and improperly limited the ability of the employees to continue working in their chosen profession. Importantly, the Court also declined to “blue-pencil”** (rewrite or modify) the agreement to make it enforceable.

This is a critical takeaway for both employees and employers: in North Carolina, a non-compete is not automatically enforceable simply because someone signed it.

What North Carolina Courts Look For in Enforceable Non-Competes
Under North Carolina law, courts evaluate whether a **restrictive covenant** is valid based on factors such as:

– Reasonableness in time
– Reasonableness in scope
– Reasonableness in territory (where applicable)
– Whether the agreement protects a legitimate business interest
– Whether the restraint violates public policy

(“Covenants not to compete are valid and enforceable if they are: “(1) in writing; (2) reasonable as to terms, time, and territory; (3) made a part of the employment contract; (4) based on valuable consideration; and (5) not against public policy.”)

When those requirements aren’t met, the agreement may be found unenforceable.

How This Decision Impacts Employees and Employers
This ruling may affect anyone dealing with non-compete agreements in North Carolina, including:

– **Employees** considering a new job or practice change
– **Health care providers** and licensed professionals impacted by “practice” restrictions
– **Employers** who want to enforce or update restrictive covenants
– Parties facing **threats of enforcement** or litigation after separation

Need Help Reviewing a Non-Compete in North Carolina?
At Brian Elston Law, we review North Carolina restrictive covenants with a focus on practical outcomes and legal strategy. Our employment-law team regularly handles issues involving:

– Non-compete agreements and restrictive covenants
– Separation agreements and employment disputes
– Workplace conflicts and employment-related civil litigation

If you’re being asked to sign a non-compete, already signed one, are changing jobs, or are facing enforcement threats, we can help you understand your rights, risks, and options.

Contact Brian Elston Law

If you have questions about a North Carolina non-compete or another employment law issue, contact Brian Elston Law to discuss what steps to take next.