The Nevada Supreme Court recently issued a ruling that should have all Nevada employers asking an attorney to review the non-compete clauses they require their employees to sign. In Golden Road Motor Inn Inc. d/b/a Atlantis Casino Resort Spa v. Islam, 132 Nev.Adv.Op. 49 (July 21, 2016), the Nevada Supreme Court ruled a non-compete clause was unenforceable and, more importantly, the entire agreement was therefore wholly unenforceable.
Generally, Nevada courts will uphold a non-compete agreement unless it is “unreasonable,” which is defined as a restraint of trade that “is greater than required for the protection of the person for whose benefit the restraint is imposed or imposes undue hardship upon the person restricted.” In the context of an employer’s non-compete agreement, there is no formula for deciding reasonableness, but courts will look at several factors, including the time and territory covered in the agreement. For example, Nevada courts have ruled that a five-year restriction was too great a hardship for the employee and was not necessary to protect the employer’s interests, and was thus unenforceable. Another non-complete clause which restricted an employee’s future employment anywhere “within fifty miles of any area which was the ‘target of a corporate plan for expansion’ was unreasonable” and unenforceable.
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