Indiana Court of Appeals Narrows the “Blue Pencil” Doctrine as Applied to Employee Non-Compete Agreements

Employee non-compete agreements are key to many transactions, whether as part of acquisitions, joint ventures, conditions to investments, or the (rarely simple) addition of key employees.  This guest post provided by our Labor and Employment Group discusses a very important narrowing of the “blue pencil” doctrine in Indiana relevant to employee non-compete agreements in virtually all contexts.

As the result of an Indiana Court of Appeals’ recent decision, it just became more difficult to enforce employee non-compete agreements in Indiana.

Indiana courts have long held that employment-based restrictive covenants – agreements that prohibit a former employee from competing with a former employer in a defined geographic area for a specified period of time, as well as those that prohibit former employees from contacting, soliciting or servicing the former employer’s customers – are disfavored as restraints on trade. Yet the courts consistently have enforced such covenants if they protect a legitimate business interest of the employer (such as confidential information and trade secrets, customer relationships or business goodwill) and provided they are not overly restrictive on the former employee’s post-employment activities. The breadth of such covenants is evaluated in terms of their geographic scope, the activities that are restricted and the length of time the restrictions apply.

Read the entire article on this change to enforceability of non-compete agreements in Indiana.

About John Millspaugh

I am a partner in the Business Services Group at Bose McKinney & Evans LLP. My practice focuses on complex transactional matters such as mergers and acquisitions; venture capital, private equity, debt and other financing transactions; joint ventures and strategic alliances; product development and supply agreements; and other general corporate and contract matters for local, national and international corporations. My clients include entrepreneurial businesses ranging in size from start-ups to Fortune 500 companies. I strive to provide practical business and finance counsel to clients in addition to legal counsel. I also have experience representing clients in federal regulatory matters before the U.S. Department of Energy and the U.S. Department of Commerce. I have the good fortune to have worked on many domestic and cross-border deals, and I endeavor to exhibit skill in structuring transactions, supervising deal teams, drafting agreements and negotiating effectively while maintaining collegiality. I am also a husband to a fantastic, supportive and understanding wife; a father of three wonderful daughters; a frustrated golfer and outdoorsman; and a lover of football. View a complete bio, including a list of representative transactions at www.boselaw.com/people.cfm/staff/52.
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