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. Must verify state-specific restrictions on duration and geographic scope.
Federal Antitrust Laws: Key federal regulations including Sherman Antitrust Act, Federal Trade Commission Act, and Clayton Act must be considered to ensure the agreement doesn't unreasonably restrict trade.
Employment Laws: Fair Labor Standards Act (FLSA) and state employment laws must be considered, particularly regarding their impact on employment relationships within the partnership context.
Partnership Laws: Uniform Partnership Act (UPA), state-specific partnership statutes, and federal/state tax implications must be incorporated into the agreement structure.
Recent Legal Developments: Must consider FTC's proposed rule to ban non-compete clauses (pending), state-specific recent case law, and recent legislative changes that might affect enforceability.
Duration Requirements: The agreement must specify reasonable time limitations that are enforceable under applicable state laws.
Geographic Scope: Must define reasonable geographic limitations that protect legitimate business interests without being overly restrictive.
Legitimate Business Interests: The agreement must demonstrate and protect legitimate business interests to be enforceable.
Consideration Requirements: Adequate consideration must be provided to make the non-compete agreement legally binding.
Protectable Interests: Clear definition of trade secrets, confidential information, and other protectable business interests that justify the non-compete restrictions.
Industry-Specific Restrictions: Any industry-specific regulations or restrictions that may affect the enforceability or terms of the non-compete agreement.
