State-Specific Non-Compete Laws: Non-compete laws vary significantly by state. Some states like California largely prohibit non-competes, while others have specific requirements for enforceability. Recent state law trends are moving towards restricting non-competes.
Federal Antitrust Laws: Key federal regulations including Sherman Antitrust Act, Clayton Act, Federal Trade Commission regulations, and the recent FTC proposed rule to ban non-competes must be considered.
Employment Law Considerations: Fair Labor Standards Act, state employment laws, and the legal distinction between employees and shareholders need to be taken into account when drafting non-compete provisions.
Securities Laws: Securities Act of 1933, Securities Exchange Act of 1934, and state securities laws ('Blue Sky Laws') must be considered as they affect shareholder agreements.
Case Law Precedents: Existing case law regarding reasonable duration, geographic scope, scope of restricted activities, legitimate business interests, and consideration requirements must inform the drafting.
Constitutional Issues: Constitutional considerations including right to work, interstate commerce, and contract rights must be addressed in the agreement.
Enforceability Requirements: Key enforceability factors including reasonable time limitations, geographic restrictions, scope of prohibited activities, legitimate business interest protection, consideration provided, and public policy concerns must be incorporated.
