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  1. #1
    Join Date
    Apr 2008

    Default Non-Competition In Michigan

    My question involves employment and labor law for the state of Michigan:

    I had signed an employment agreement with an IT Consulting Firm (Company) about two years ago without going through every details with any lawyers.

    Recently, the client (also an IT company) of the Company has offered me the same position where I was hired by the Company to service the client. Now the Company has sent me a certified letter as a reminder to ‘enforce’ the Employment Agreement contains a provision, which precludes employee from being employed by the client or competitor servicing the client for a period of one(1) year following the employment termination from the Company.

    The specific contract provides:

    During the term of Employee’s employment and for a period of one(1) year after the termination thereof for any reason whatsoever, Employee shall not, directly or indirectly, for himself or no behalf of any other person, firm, corporation or other entity that competes, in any way, with the Company: (a) induce or attempt to influence any employee of the Company to terminate his employment with the Company; (b) solicit, service, divert or accept any person, firm, corporation or other entity with whom Employee had personally dealt while employed by the Company as a customer, client; (c)solicit, service, divert or accept the referral of any person, firm, corporation or other entity as a customer, client or recruit from any referral source with which Employee had personally dealt while employed by the Company.

    1. 1. Is this a reasonable contract? Unfortunately that I had to sign the contract without go through all details.
    2. 2. How enforceable of the contract in Michigan?
    3. 3. This type of non-compete clause is not realistic at all since my job does not involve any trade secrets.
    4. 4. What is the best way to take this to the court?

  2. #2
    Join Date
    Feb 2008

    Default Re: Non-Competition In Michigan

    (1) Your first mistake was not taking this to a lawyer before you signed it.

    (2) Based on what I found about MI NCAs, MI courts have upheld NCAs that have a 1-2 year limitation. Geographically, how far is this client from your consulting firm? It doesn't sound like they put in a geographic limit. But each contract can be different and the devil will be in the details. I suggest you contact an attorney now and ask.

    (3) I don't think it matters that your job doesn't involve "trade secrets". The fact is that you signed a contract and as long as that contract abides by state law/state precedents, it can be enforceable. And it sounds like the company will enforce it based upon the friendly reminder via certified mail.

    (4) First of all you need to take the contract to a local attorney who is well versed in MI NCA/employment law.

    It is possible that the client company also had to sign something in the consulting agreement that they would not "hire away" the consultants that came to work at their company via the consulting firm.

    That said, my husband has been through this same situation but in a different state. The two companies and he finally solved the issue after months of negotiations by the client company (1) paying a finders/recruiting fee of about 3 months salary to the consulting firm AND (2) guaranteeing the IT consulting firm $xxx,xxx worth of work within a certain time period. We didn't hold out much hope at the time that the job change would actually happen and were pleasantly surprised when it did.

    Is the client company willing to help you negotiate out of the contract? Have they signed anything from their side? Because if they did, they could be sued for their contractual obligations too.

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