Kentucky courts have determined that restrictive covenants are enforceable if the terms are reasonable and necessary to protect a legitimate business interest of the employer such as customer contacts or confidential information. Factors considered when determining reasonableness include the hardship an agreement puts on the former employee, its effect on the general public and the restrictions placed on time, territory and activity of the former employee.
Agreements may be deemed unenforceable if a court finds that they are unreasonable in terms of duration, geographic scope and the type of employment or line of business being restricted. If a court finds an agreement is unreasonable, it may modify the agreement so that it does not unduly infringe on the former employee’s ability to work.
Examples of non-compete agreements that Kentucky courts have found to be reasonable include:
- A 1-year restriction against a former private security guard from working or hiring others to work at the site where he had provided security services within the one year preceding termination of employment. In this case the restriction only applied to one customer.
- A 5-year, 50-mile restriction against a public accounting practice.
- A 1-year, 200-mile radius restriction against an insurance adjuster from competing with his former employer in any territory he had serviced when his employment terminated.
The courts have found the following restrictive covenant unreasonable:
- An oral agreement not to compete between a cleaning and laundry business and its delivery person because there were no limits as to time or territory.
Therefore, the geographical restriction may not apply. Even if the limit did apply, it may be unenforceable.
Nonetheless, as these factors indicate, the analysis of this issue is highly fact-intensive, and will vary case by case. There is no bright-line rule.
That said, it is recommended to consult a local attorney to protect your rights and interests.