Louisiana law allows employers to restrict former employees from competing with them for a 2 year period after the end of the employment. This competition is supposed to be limited to particular parishes where business is “carried on.”
That can be easy to define if the business is a brick-and-mortar, but how does that work in the Internet age, where clients and contractors work across state, parish, and international lines, without any clear indication of where the business is actually carrying on?
That’s the point of discussion in a recent LSU Law Review Article, which considers the following hypothetical:
Imagine a graphic designer named Charlie who works at a design firm based in Baton Rouge, Louisiana. On his first day of work, Charlie signs some paperwork, including an agreement not to compete. The noncompetition agreement (noncompete) provides that if Charlie separates from the firm, he must refrain from engaging in the business of graphic design within the parishes of East Baton Rouge, West Baton Rouge, Livingston, and Ascension for a period of two years. During the course of his employment, Charlie designs many graphics for the firm’s customers who submit online orders via the firm’s website. Two years later, however, the firm decides that it needs to lay off Charlie due to
Though he is devastated, Charlie makes every effort to stay on his feet. He launches his own solo graphic design business, which he operates from his home in East Baton Rouge. His business’s website allows customers to submit online orders in exchange for Charlie’s graphic design services. So far, Charlie’s only customers are located beyond the geographic scope of the noncompete in Calcasieu Parish, Louisiana; Houston, Texas; and Nashville, Tennessee. After learning of Charlie’s website, however, his former employer files suit in East Baton Rouge Parish seeking to enforce the noncompete. If the employer’s suit is successful, Charlie would not be able to design graphics for anyone from his home in Baton Rouge, regardless of where his customers are located. Additionally, Charlie would be prohibited from doing so for two years. As a result of the noncompete, to earn a living he would be forced to either leave the restricted area if he wants to continue working as a graphic designer or take a job in another field outside of his expertise.
Ultimately, the article concludes that Louisiana’s noncompete is ill-suited for the internet age, which only leaves businesses, former employees, and lawyers in the awkward position of not knowing how the law will apply in certain situations.
You can read the article by clicking here.