Group Proposes Limited Use of `Non-Compete' Clauses

Article excerpt

State law currently prohibits the use of "non-compete" clauses in all employment contracts and only allows the covenants in connection with the sale of a business or the dissolution of a partnership.

But officials with the Oklahoma Bar Association believe state law should allow the use of non-compete clauses in the contracts of high- ranking executives at major companies, saying those officials are in a position to materially affect a company's operations should they leave and reasonable restrictions should apply in those cases.

But members of the House Judiciary Committee didn't appear receptive to the idea during an interim study.

Rep. Ray Vaughn, R-Edmond, who requested the study, noted that there is "no such thing" as a "reasonable" non-compete clause in current law, and said workers should not be shackled by that type of restriction.

"That's real simple to me," Vaughn said. "I think we've kind of fixed the problem."

Vaughn noted that non-compete clauses are routinely included in employee contracts, but said those clauses are not enforceable under state law and are usually a "bluff" by the employer.

Gary Derrick, chair of the Oklahoma General Corporation Act Committee of the Oklahoma Bar Association, told lawmakers that low- level workers should not be forced to sign contracts with non- compete clauses, but argued that executives have the power to actually harm a company and should be subject to different standards.

Draft amendments prepared by Derrick and the Oklahoma Bar Association would expand state law to allow non-compete clauses in certain employee contracts and establish criteria to determine whether the clause is "reasonable" or not. …