Noncompete contracts in state carry a number of restrictions
Q: Is it legal in Oklahoma to require my employees to sign a covenant not to compete, if they quit or are fired?
A: As a general rule, in Oklahoma, contracts that restrain a person from exercising a lawful profession, trade or business are prohibited, except as otherwise provided in Oklahoma statutes. Oklahoma does have a statute allowing a contract between an employer and employee that includes a covenant not to compete after the employment relationship is over. However, the statute provides the employee “shall be permitted to engage in the same business as that conducted by the former employer or in a similar business as that conducted by the former employer, as long as the former employee does not directly solicit the sale of goods, services or a combination of goods and services from the established customers of the former employer.”
Q: What are the negatives associated with this statue?
A: In most cases, this statute raises more questions than it answers. For instance, the law does not address how long the noncompetition clause may be enforced after employment is terminated. It does not define who an “established customer” is. It does not explain what “directly” soliciting a customer means. The statute also does not describe the geographic area in which the covenant may be enforced.
Q: Do I need an attorney to draft such a document?
A: Yes, it's advisable to consult an attorney before drafting or entering into a covenant not to compete. Oklahoma courts have addressed some of these issues, and those decisions may be of assistance in ensuring the agreement is in accordance with Oklahoma law. Otherwise, the agreement may be void and unenforceable.
Q: What are the reasons for a noncompete contract in Oklahoma?
A: Many business owners think they want a covenant not to compete, when what they are really concerned about is protecting trade secrets, such as pricing information, customer lists, and so on. Often, businesses also confuse the need for covenants not to compete in the employment context, with agreements related to the sale of the company. The law is different for these issues.
PAULA BURKES, BUSINESS WRITER