United States: Revisiting Non-Competition Agreements In New Hampshire: Recent Legal Developments Require Care And Precision

Non-competition agreements are vital tools for businesses to use to protect their confidential information and customer relationships from misappropriation by departing employees and competitors.; Admittedly, employees have a countervailing interest, to ensure that they are not required to sign contracts that unreasonably restrict their ability to secure alternative gainful employment in their fields of expertise. Courts have balanced these perpetually competing interests by requiring businesses seeking to enforce non-competition agreements to prove that the agreements are narrowly tailored to protect only their legitimate interests. Three recent legal developments highlight just how critical it is for businesses that use non-competition agreements to understand and comply with the restrictions applicable to such agreements.

The first development is a statute that invalidates all non-competition agreements signed after July 14, 2012 (the effective date of the law), if the agreement is not signed in conjunction either with a job offer to a new employee or an offer of a new job to an existing employee, or if the agreement is not given to the new or existing employee before or with the offer. The unintended consequences of the statute have created unwarranted difficulties for companies seeking to implement non-competition agreements in a variety of legitimate business situations. For example, an employer that renews an employment contract containing a non-competition agreement with an existing employee, but is not moving the employee into a new job, may be surprised to later discover that the non-competition agreement (and, potentially, the entire employment contract) is invalid.  Similarly, when one company purchases another, the buyer cannot require that the seller's owners and employees sign non-competition agreements, even if the buyer pays them to sign the agreements. This new statute has required businesses to take extreme care when implement new non-competition agreements with existing employees, and has limited even legitimate situations in which businesses can use such agreements.

The other two developments were cases decided by New Hampshire's Business Court in March and April of this year.  One case involved a non-competition agreement that prohibited the employee (an investment advisor) from soliciting or providing services to "any client or prospective client" of the company. The employee, however, only managed existing clients' portfolios, and did not develop new clients or work with prospective clients. The court ruled that the agreement was invalid as to the employee, because the company had no legitimate right to prevent the employee from soliciting prospective clients after the employee left the company. The outcome in this case highlights just how important it is for businesses to ensure that their non-competition agreements are tailored to the specific circumstances of each particular employee. Unfortunately, modifying such agreements to tailor them to existing employees' circumstances can be problematic in light of the statute discussed above.

The other case involved a non-competition agreement between a personal fitness business and one of its independent contractor trainers. New Hampshire had not previously addressed the enforceability of these agreements with contractors. The court recognized that,

the legitimate protectable interests of an employer seeking to enforce a restrictive covenant against an independent contractor may be considerably limited as compared to enforcement against an employee.

For example, it is (or should be) inherent in the nature of the independent contractor relationship that the contractor provides similar services to other businesses, which may be competitors, whereas employees cannot simultaneously work for competing businesses. Also, independent contractors typically (should) have less access to confidential information than employees. As a result, according to the court, a business must tailor its non-competition agreement to the "nature of the transaction" with the independent contractor for the agreement to be enforceable.

The lessons to be learned from these recent developments are that businesses should be precise when creating non-competition agreements, and should take care when implementing these agreements with existing employees. Specifically, when drafting non-competition agreements, businesses should ensure that the language of the agreements is narrowly tailored to protect only the companies' legitimate interests with respect to the specific employees or independent contractors who are signing the agreement. The interests that businesses are legitimately entitled to protect with non-competition agreements include the following:

  • Businesses can use non-competition agreements to prevent employees and independent contractors from taking advantage of the goodwill, rapport and relationships that they develop with customers.
  • Businesses may use non-competition agreements to prevent employees and independent contractors from performing later work that will entail their use of the companies' confidential information and trade secrets.

Similarly, businesses that want to sign new non-competition agreements with existing employees should take care that the agreements are implemented with offers of a new job.

Non-competition agreements should not be abandoned by New Hampshire businesses, despite the difficulties created by these recent legal developments – protecting confidential information and customer relationships is just too important. Care and precision are all that are necessary to create smart and enforceable non-competition agreements.

Cameron Shilling is a shareholder at McLane, Graf, Raulerson & Middleton, where he is a member of the Litigation Department and the Employment Law Group.

Published in New Hampshire Business Review, July 2013

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions