workplace non-compete
Noncompete agreement - Esthetician
<p>A friend of mine works at a skin care and retail store as an esthetician (dealing with skin care and other spa related treatments). Her boss has had her sign a non-compete agreement that would bar her from working as an esthetician in the local area if she were to leave. I would like to confirm if this is legally binding, and to what degree.</p>

<p>I am under the impression that non-competes are difficult to enforce if they prevent you from making a lively in your chosen field, particularly since there would no proprietary knowledge being taken to another organization. What vulnerability is she open to?</p>

<p>*This question pertains to New Hampshire, USA</p>

<p>**I will not use any guidance here as legal council. I am looking for some initial information. </p>

<p>Such a clause must be presented before or at the same time the offer is made. The (somewhat new) law <a href="http://www.gencourt.state.nh.us/rsa/html/xxiii/275/275-70.htm" rel="nofollow noreferrer">NH RSA 275:70</a> says</p>

<blockquote>
  <p>Any employer who requires an employee who has not previously been
  employed by the employer to execute a noncompete agreement as a
  condition of employment shall provide a copy of such agreement to the
  potential employee prior to the employee's acceptance of an offer of
  employment. A noncompete agreement that has not been disclosed to an
  employee as required by this section shall not be enforceable against
  the employee, but all other provisions of any employment,
  confidentiality, nondisclosure, trade secret, intellectual property
  assignment, or any other type of employment agreement or provision
  shall remain in full force and effect</p>
</blockquote>

<p>The question is whether such an agreement would mean you can't set up shop on your own and take a bunch of customers with you (it seems that such clauses are enforceable), or does it mean you can't work in that trade (competing for new customers, or as an employee of a competitor) – such an interpretation would not be enforced, in the <a href="http://www.unionleader.com/apps/pbcs.dll/article?AID=/20160424/NEWS02/160429647" rel="nofollow noreferrer">analysis of this article</a>. The clause must be "drafted narrowly to protect only a company's legitimate business interests, like customer goodwill and confidential information". A specific case of this interpretation is <a href="https://casetext.com/case/merrimack-valley-wood-prods-v-near" rel="nofollow noreferrer">Merrimack Valley Wood Products v. Near</a>, 152  N.H. 192, which finds that</p>

<blockquote>
  <p>the law does not look with favor upon contracts in restraint of trade
  or competition...Such contracts are to be narrowly construed.
  Nonetheless, restrictive covenants are valid and enforceable if the
  restraint is reasonable, given the particular circumstances of the
  case</p>
</blockquote>

<p>In assessing reasonableness, three tests must be passed (must be answered "no"):</p>

<blockquote>
  <p>first, whether the restriction is greater than necessary to protect
  the legitimate interests of the employer; second, whether the
  restriction imposes an undue hardship upon the employee; and third,
  whether the restriction is injurious to the public interest.</p>
</blockquote>

<p>As an example of a reasonable restriction:</p>

<blockquote>
  <p>When an employee is put in a position involving client contact, it is
  natural that some of the goodwill emanating from the client is
  directed to the employee rather than to the employer. The employer has
  a legitimate interest in preventing its employees from appropriating
  this goodwill to its detriment.</p>
</blockquote>

<p>But restricting a person from working with <em>any</em> customers of the company (not just the employees work-related contacts) is unenforceable, because the company</p>

<blockquote>
  <p>had no legitimate interest in protecting its entire client base
  from its former employee, because he had no advantage over any other
  complete stranger, possessing no special hold on the goodwill of the
  majority of Technical Aid's customers.</p>
</blockquote>

<p>See also <a href="https://www.courts.state.nh.us/superior/orders/bcdd/Brians-v-Woodward.pdf" rel="nofollow noreferrer">Brian's Fitness v. Woodward</a> for reaffirmation ("valid only to the extent that it prevents an employee from appropriating assets that legitimately belong to the employer"), and additional citations.</p>

<p>The question arises whether there is a distinction between the former employee approaching former customers, versus those same customers approaching the former employee. I have not located any case that directly addresses that, but <a href="https://casetext.com/case/technical-aid-corp-v-allen" rel="nofollow noreferrer">Technical Aid v. Allen</a>, 134 N.H. 1 says</p>

<blockquote>
  <p>A restrictive covenant must unreasonably limit the public's right to
  choose before it will be found to be injurious to the public interest.</p>
</blockquote>

<p>I think it is likely that the courts would find it to be an unreasonable limit on the public's right to choose, if a customer were prevented from choosing a different company to provide the desired service simply because the customer happened to have previously had a business relationship with the former employee. This "right to choose" is asymmetrical – the public has a right to choose any service provider, an employee does not have an equivalent right to pursue (seek out, woo) a customer, in light of a restrictiveness covenant.</p>
