In Osborne, the employee was hired by a South Dakota company to work as a sales agent in his office in Fargo, North Dakota. The employment contract was a non-compete clause and non-invitations, as well as a selection of lawyers and forums in South Dakota. In a unanimous decision, the Supreme Court of North Dakota refused to impose the choice of law and forum selection, applied North Dakota law and found that the non-competition and non-invitation clauses under section 9-08-06 are not applicable: non-competition agreements, also known as anti-competitive agreements or restrictive agreements , are employment contracts used by employers to limit a worker`s ability to compete with the employer by stealing customers or trade secrets. Such agreements are also used when a business is sold or a partnership is broken. Enforceable agreements must strike a balance between protecting the employer`s legitimate business interests from an unfair competitive advantage and the worker`s right to work in a sector for which he or she is trained. In general, the courts decide what is deemed appropriate or inappropriate by examining the nature and size of the business, the duration and geographic area of the application of the restrictions, and whether the worker received a reasonable consideration or benefit at the time the contract was signed. Even with the expanded exceptions, House Bill (HB) 1351, which came into force on August 1, does not change the general prohibitions of the Land Act against the restrictive provisions of competition contained in the treaties. Prior to the amendment, the law generally prohibits any contract preventing a natural or legal person from practising a lawful profession, legal profession or transaction, unless there has been a sale of a company`s value or a dissolution of a partnership. Many North Dakota employers, especially those based in the state, often inquire about a unique aspect of North Dakota business law when it`s too late.
It is only when an employee ceases and creates a competing business that the employer finds that North Dakota law provides that non-compete agreements are almost always equal. Finally, the Court`s decision confirms what many North Dakota practitioners have already suspected: there is no sure way to circumvent the prohibition of non-competition prohibitions. The best method is to make the worker a business owner, regardless of the small percentage of equity, to link the non-competitive disposition to such a property and to establish a purchase sale requiring the employee to sell his shares after the termination of the employment relationship. If the worker is also the owner, the non-competitive agreement should be entered into under the N.D.C.C. The nearest hope is to develop strict privacy and confidentiality rules that handcuff a former employee`s ability to compete in the same field in the future. Brown hired Osborne as a sales agent in his office in Fargo, North Dakota, to sell office supplies. Brown is headquartered in South Dakota.