Judge limits noncompete agreement against hair doctor

As Baton Rouge area readers may be aware, the use of noncompete agreements has expanded in recent years to encompass a broader range of professional fields, notably including the medical professions. A county circuit court recently issued a ruling in an employment law case that placed one doctor at the center of a battle between two well known hair replacement companies.

The doctor worked for a downtown Chicago branch of Bosley Medical Group until he left last year to open a branch of hair replacement competitor Ziering Medical in a nearby suburb. Bosley filed suit claiming that the competitor had improperly solicited its employee and that the doctor had violated the terms of a noncompete agreement. Bosley sought $850,000 in damages.

The circuit court judge applied a narrow interpretation of the terms of the noncompete agreement and concluded that the original employer was trying to expand the scope of the agreement beyond its actual terms. The language of the agreement restricted the doctor’s ability to provide services to customers in Cook County, but the doctor’s new business was located in a different county. The judge noted that the noncompete agreement failed to restrict the doctor’s ability to market his services to Cook County residents, even though it could have been drafted that way.

As a general rule, courts will look to several factors to determine the enforceability of a noncompete agreement. Common considerations include the length of the limitations against competition, the geographic area affected, and the types of activities restricted by the agreement. Louisiana law also imposes certain statutory restrictions upon the terms of noncompete agreements. Employers considering the use of noncompete agreements may find that advance consultation with experienced legal counsel helps avoid employment litigation in the future.

Source: Crain’s Chicago Business, “Bad hair day for Bosley,” Kristen Schorch, Dec. 11, 2012