Suppose a former employee has breached your company’s covenant not to compete after she left employment. Are you, the employer, entitled to get the non-compete period extended as a remedy for the breach?
Great question. And one that differs depending on the state.
- First, some courts have reasoned that a court has broad and inherent power to extend the duration of a restrictive covenant as an equitable remedy for breach.
- Second, some courts have suggested that the duration of a restrictive covenant may only be extended as a remedy for breach if the parties included language in their restrictive covenant contemplating such a remedy.
- Third, some courts have reasoned that the contractually-specified duration of a restrictive covenant may never be extended by a court as a remedy for breach.
So, what’s the proper result in Connecticut?
Well, in this case, the court rejected the employer’s argument for an extension. In doing so, it concluded that the ending of the restrictive covenant time period ends the matter. In fact, the court concluded “The Court finds no evidence that the Connecticut Supreme Court would follow the decisions of other states’ high courts that have held that trial courts have broad equitable power to extend even an expired restrictive covenant as a remedy for breach.”
But all is not hope for employers in Connecticut. The court did suggest that the result might be different if “the restrictive covenant contains language that expressly permits extension of the restrictive covenant.” In that type of situation, the court might then possess the power to extend the duration of the non-compete.
What’s the Takeaway for Employers?
If you use non-compete agreements or other types of restrictive covenants, consider adding a provision that expressly permits an extension of the restrictive covenant if the employee breaches the agreement. That way, you may have an additional type of remedy besides seeking monetary damages.
In addition, employers may want to review their existing agreements to see if that language is present and consider amending them at an appropriate time to add this provision if necessary.