Articles Discussing Restrictive Covenants In Louisiana.

A recent ruling from a Louisiana appellate court is a reminder that a noncompete agreement that fails to specify the parishes or municipalities a former employer wishes to protect is unenforceable.

In Louisiana, restrictive covenants—known locally as “no competes”—are unenforceable by statutory default. One exception, based on the employer-employee relationship, authorizes an employer to enforce an agreement preventing a former employee from working for a competing business or soliciting customers after the employee leaves employment with the first employer.

A recent opinion from the United States Court of Appeals for the Fifth Circuit applying Louisiana’s restrictive law governing noncompetition agreements, reminds employers of the importance of establishing an employee-employer relationship before entering into noncompetition agreement.

Under Louisiana law, noncompetition agreements may limit competition only as to business similar to that of the former employer. The provision in Advanced Medical Rehab, L.L.C. v. Manton, the court found, violated La. R.S. 23:921 as it prohibited Manton from employment in the practice of marketing for any business, not

An employee’s termination date – that is, the date the employee quits or is fired – may be critical to determining when his non-competition obligations expire. Under Louisiana law, a non-competition agreement “not to exceed a period of two years from termination of employment.” La. R.S. 23:921(C).

A trend may be developing in favor of non-compete agreements in Louisiana. Two recent appellate court decisions enforced their terms, even though they contained either overly broad or ambiguous language. The first is from the Louisiana Supreme Court, Causin, L.L.C. v. Pace Safety Consultants, LLC, which we have previously discussed. The second is from the U.S. Fifth Circuit, Brock Services, L.L.C. v. Rogillio, 19-30363 (Aug. 27, 2019).

Louisiana has strict requirements for enforcement of non-compete agreements which are not “favored” in the Pelican state. In a recent case, Boudreaux v. OS Restaurant Services, LLC, a former employee in Louisiana preemptively filed a lawsuit claiming a violation of Louisiana’s unfair trade practices statute and intentional interference with business relations after his former employer sent a letter stating its intent to enforce a non-compete agreement. The district court held that the complaint alleged sufficient facts to support the two claims and survive dismissal.

A Louisiana appellate court recently decided that a non-competition agreement was unenforceable. But not because it contained unreasonable geographic or temporal restrictions or failed to strictly comply with Louisiana’s non-compete statute. Instead, the court found that the non-competition obligations had already expired during employment.

The Louisiana Court of Appeals, First Circuit, recently affirmed a lower court’s denial of a preliminary injunction to enforce a covenant not to compete in Gulf Industries, Inc. v. Boylan (La. App. 1 Cir. June 6, 2014). The case demonstrates continued careful scrutiny by Louisiana courts of non-compete agreements.

Perhaps the most significant of the employment law bills passed by the Louisiana Legislature this year is the “Personal Online Account Privacy Protection Act” signed into by Governor Jindal on May 23, 2014.