A Nevada Non-Compete Agreement is a legal contract that restricts an employee from working for a competitor or starting a competing business for a certain period of time after leaving their current employer.
These agreements are generally enforceable in Nevada, but there are certain rules and limitations that employers must follow to ensure their non-compete agreements are legally binding.
Reasonable Uses and Objections
- Enforceable when terminated without cause? – Undecided, except with salaried employees who were laid off. In this situation, it is enforceable.
- Employee non-solicitation agreement permitted? – Yes.
- Customer non-solicitation agreements permitted? – Yes.
- Does continuing employment equal sufficient consideration? – Yes.
Legally Enforceable in Nevada?
Like non-compete agreements in most states, non-compete agreements in Nevada are legally enforceable. However, there are limitations to what a Nevada non-compete agreement can protect. There are also regulations about reasonable use and exemptions that govern when a Nevada non-compete agreement is enforceable.
What’s Protected?
Non-compete agreements in Nevada protect both trade secrets and goodwill. These are two of the most commonly protected categories for non-compete agreements in America. However, other categories, such as confidential business information (e.g., the state of a company’s finances), are not protected. In this regard, non-compete agreement regulations in Nevada differ from those in states like Arkansas.
The trade secrets in Nevada can include a company’s intellectual property and business intelligence. For example, an employee of a car company cannot share proprietary information about a new type of steering wheel. Goodwill can also be protected by non-compete agreements in Nevada.
This means that a former employee is not allowed to continue to use their former employer’s brand to promote themselves or their new business.
Reasonable Use and Exemptions
If you’re wondering, ‘Do non-compete agreements hold up in Nevada?’, it depends on the situation. Nevada non-compete agreements are limited by reasonable use regulations and exemptions. In Nevada, non-compete agreements can only extend as much protection as the employer genuinely needs, not more.
Companies cannot keep former employees from doing business with their customers or clients if the former employee does not solicit this business. Also, employees who are only paid an hourly wage are exempt from non-compete agreements.
Limitations on Time
The maximum effective length of a non-compete agreement in Nevada is not specified. It depends on a reasonableness standard.
Geographical Limitations
The Nevada Supreme Court has ruled that non-compete agreements in Nevada are limited to geographic areas where the employer has goodwill and customer contacts, as per NRS 613.195(1). In essence, this means that countrywide non-compete agreements will not be enforced in Nevada.
However, as there is no specific geographical limitation encoded into law, this regulation is a bit vague.
Nevada courts have been reluctant to enforce non-compete agreements with sweeping geographical scopes in the past, so employers may want to limit the geographical scope specified in their non-compete agreements. Otherwise, a Nevada court could find the non-compete agreement invalid.
Sample
Below, download a Nevada non-compete agreement in PDF or Word format:
