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Protect Your Business Interests with Anti-Raid and Anti-Disparagement Provisions
We’ve talked before about how South Carolina courts tend to favor employees over employers in regards to covenants not to compete. This means that employers must be very careful in wording covenants not to compete to ensure they’re not overly broad or too restrictive.
But this bias against employers doesn’t extend to all covenants employers use. South Carolina courts are more likely to enforce covenants that don’t have clauses and provisions limiting an employee or former employee from earning a living in their profession.
Two other provisions that can help protect an employer’s business interests and should be considered when drafting a covenant not to compete are anti-raid provisions and non-disparagement provisions. As with covenants not to compete, the purpose of these provisions is to protect the employer’s interests after an employee leaves the company. Let’s look at them in turn.
The anti-raid provision typically states that for a period of time after the employee is no longer with the company (and possibly during employment as well), they may not approach or attempt to solicit anyone working for the company to leave in order to compete with the company. This is intended to prevent an employee from leaving the company and taking along other employees, which is clearly detrimental to the company’s interests.
Like covenants not to compete, these provisions must be reasonable. In practice, that means limiting the provision to a restricted period of time, often a year after leaving employment. South Carolina courts are likely to interpret these more favorably for the employer rather than the employee, as they don’t harm the employee’s ability to make a living in their profession after leaving their employer.
This clause prohibits an employee from disparaging, or making negative comments, about the company, its officers, and its employees, whether orally or in writing. This provision can be found in both employment agreements (often as a clause within the covenant not to compete) and in severance or settlement agreements at the end of the employee’s tenure. The purpose is to protect the company’s reputation. Again, South Carolina courts may be favorable towards these clauses because they don’t have anything to do with restricting the employee’s right to work. Employers should consider using this clause as a matter of course upon either hiring or dismissing employees.
Still, employers need to use caution with this clause. The agreement must be clear to both parties, as a lack of clarity can lead to unintended consequences. Great care is warranted with these clauses, in part because they are greatly disfavored by state and federal agencies.
Work with an Experienced Business Attorney in Mt. Pleasant, SC
As always, remember that issues like this depend very much on the state where business is being done and arbitrated.
If you need legal advice on business contracts, employment or severance agreements, business real estate transactions, corporate taxes, or other business matters in South Carolina, contact Gem McDowell Law Group in Mt. Pleasant, SC. Gem and his associatess help businesses of all sizes protect their interests so they can continue to grow. Call today to schedule an initial consultation at 843-284-1021.