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Memorandum final version

Memorandum final version - Memorandum To Ms Lucy Benham...

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Memorandum To: Ms. Lucy Benham From: Mark Sholtis Subject: Michigan Non-compete Agreements Date: 11/12/2010 INTRODUCTION: To follow is a detailed explanation of statute MCL§445.774(a), the Michigan Antitrust Reform Act - Act 274 of 1984 which governs an employers’ right to require it’s employees to enter into a covenant in order to protect its business and interests (non- compete agreement). This statute also allows the court to determine what limitations in these agreements may or may not be considered reasonable, as well as what specific conditions an employer can impose on their employees when an employee signs a non-compete agreement. Based on these findings you will find within this memo, decisions made by the Michigan Court of Appeals that show precedent on how the courts determine reasonableness of two different non-compete agreements so that you can determine for your own business what sort of limitations you can impose on your employees and remain in compliance within the statues parameters as well as what types of sanctions and/or fines that may occur if ever your agreements were determined to be unfair or unreasonable by a court in the state of Michigan. DISCUSSION: MCL§445.774(a) was passed in 1987 to allow employers to obtain agreement that their employees, upon termination agree not to compete with any of the businesses’ service provision, trade and/or commerce, which in effect allows the employer to protect his business interests. Furthermore, this statute also allows a court, to determine the reasonableness of non-compete agreements and covenants, enforce these covenants, and limit the conditions an employer has imposed if deemed unreasonable. The following are guidelines to adhere to when drafting an employee non-compete agreement under MCL§445.774(a): a. Protected Business Interests: The agreement must be deemed necessary in order to protect your business interests. Under this parameter of the statute, you have the right to include limitations that would protect relationships that relate to your business. This includes all client contact information (i.e. the employee can’t use current client information to lure your customers to his competitive business). Furthermore, you have the right to include a good-will clause that
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