What Is A Non-Competition Clause in Oklahoma?

A Non-Competition Clause in Oklahoma is a contract between a business and its employee. You may have signed a covenant not to compete when you started a recent job. Many businesses have a standard clause in their employment agreement that restricts people who leave the company from starting or working for a competing business in the area. This type of contractual agreement is called a “covenant not to compete” or a “noncompete” clause. While a noncompete can be legally binding, Oklahoma laws do not allow companies to completely restrict former employees from going into a similar business in the same area, even if it may create more competition for that business. Here’s more on covenants not to compete and other contract issues.

Non-Competition Clauses and Unfair Competition

At a basic level, a covenant not to compete is a restraint on trade – it stops you from working in an industry in competition against a company that employed you. In general, Oklahoma law does not respect agreements that lead to restraints on trade because it has the effect of limiting what a worker can do and what business can exist.

The law in Oklahoma says that a non-competition agreement can’t completely stop you from going into the same business in competition with the company you once worked for. The law does say, though, that an agreement can serve to prevent you from directly soliciting the sale of goods, services, or a combination of goods and services from the established customers of the company you worked for.

Generally, Oklahoma courts won’t enforce a covenant not to compete against workers who want to work at different businesses. They will respect the noncompete agreement that stops the former employee from going after specific customers or workers at the company they used to work for. A related Oklahoma law says that a noncompete clause that stops a former employee from hiring or even trying to hire independent contractors or other workers from the company they worked for is a valid restriction and that courts can’t consider that kind of non-competition agreement to be a restraint on trade.

Using A Covenant Not To Compete In An Employment Agreement

As an employer who may want to include a covenant not to compete in an employment agreement, you need to know the limitations in Oklahoma law on these agreements. The laws appreciate the fact that non-competition clauses can have reasonable and valid uses as long as they don’t go too far and try to keep a company’s former workers from doing anything at all in a field in which workers have developed unique training and skills. You may also have arbitration agreements in agreements not to compete.

The court looks at the terms of the agreement, including the company and the employee who signed the agreement, in deciding whether it may be valid. A court will assess the amount of restriction the agreement puts on the former worker in terms of activity allowed, territory restricted, and time of restriction when considering if a covenant not to compete is fair.

As an employer, you will also need to know if potential new hires have signed noncompete clauses with previous employers that may prohibit them from working with you. Your company may share some blame with the other company if the employee is found to violate a valid covenant not to compete.

Non-Competition Clause Attorneys Near You

Covenants and other clauses in employment contracts can be complex. Fortunately, business contract attorneys regularly address these issues in drafting or negotiating agreements. Whether you are the employer or employee, failing to work with an Oklahoma contract attorney could lead to costly complications down the road for you. A clear and legally enforceable contract that details both parties’ obligations could work to prevent conflict and litigation. Speak to a contract lawyer today to discuss drafting one that meets your needs and complies with all legal requirements. For more insights on covenants and other contract issues, reach out to Kania Law Office by calling (918) 743-2233 or contacting us online.