Enforceability of Restrictive Covenants in Distributorship and Independent Contractor Agreements
Most companies include restrictive covenants (e.g., non-competes," "non-solicits," "non-disclosure," or "confidentiality" provisions) in their employment agreements, in order to protect and preserve the company's confidential, proprietary and trade secret information in the event a departing employee begins to work for a competitor. Yet, not every company uses in-house "employees" to sell or distribute their products and services. Many companies utilize distributors or independent contractors for this purpose and, not surprisingly, these companies also seek to protect themselves with restrictive covenants. This article examines the enforceability of restrictive covenants in the context of distributorship and independent contractor agreements, and offers practical recommendations for companies who would like to protect their confidential, proprietary and trade secret information.
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