Ghost of Non-Competes begins to haunt employers.

North Carolina appellate courts continue to inflict death by a thousand paper cuts on a favorite weapon employers use against their departing employees: non-competition agreements.

The latest slice came this week from the Court of Appeals, which declared that an employer had a legitimate reason for a non-compete seeking to protect customers from being poached by former employees. But the Court decided that rationale did not suffice to essentially prevent a former employee from engaging in their careers.  That reasoning is a notable leap from the usual contract-based opinions that have incrementally constricted the enforcement of non-competition provisions in employment contracts.

In Southeastern Regional Physician Services v. Allison L. Scott, FNP and Chastity Benson, NP, the Court took the usual approach of reading a non-compete and declaring it overly broad and therefore unenforceable.  The 1-year non-competition period was reasonable under the circumstances as was the geographical non-competition zone of 35 miles from the Robeson County medical practice the defendants had left.  But the court decided that prohibiting these medical professionals from “engag[ing] in the practice of Medicine” or to provide substantially similar services to those they provided for the employer during that year within that radius was against public policy because it effectively bars them from engaging in their careers. 

In other words, the employees’ right to practice outweighed the right of the employer to keep its clients from following those former employees.

This places another finger on the scales when courts try to balance an employer’s interests, even legitimate ones, against the employee’s interest in working in his or her chosen field.  The reasoning may be starker in a case involving medical practitioners than those dealing with many jobs with less “public policy” trappings—and employers have been dropping these clauses into contracts for every mundane job on the planet for decades—but this decision’s reasoning is likely to translate across the board.

It’s not clear that anyone will ever just declare non-competes dead in North Carolina.  Employers still rattle their bones when it suits them, and many people take the noise seriously. 

But this ghost is sure starting to moan in the hallowed halls of justice.