In general, South Dakota courts automatically maintain non-competition obligations between employers and workers who, without any additional analysis, fall within the legal parameters when a worker voluntarily quits or is fired for that reason. In light of recent case law, employers should review their employment contracts to confirm that their non-competition agreements are applicable. Woods, Fuller, Shultz-Smith PC regularly designs and verifies non-compete bans and can help ensure that these agreements comply with South Dakota law. In any contractual agreement, both parties must give and receive something valuable, also known as a consideration. The South Dakota courts have found that the initial or maintenance of employment offer is a sufficient consideration or benefit to the worker in exchange for his or her willingness not to compete with the employer when the employment relationship ends. Examples of non-competition that South Dakota courts consider appropriate are: while Tennessee law generally prohibits any agreement between individuals or businesses that tend to restrict trade, courts have generally imposed non-compete agreements between employers and workers when they are: despite these general guidelines, employers should be aware of a recent decision by the South Dakota Supreme Court that may have an impact on how they define the scope of restricted activities as part of a definition of competition. In Farm Bureau Life Insurance Co. Dolly, in March 2018, the court struck down the language in an agreement that prohibits an insurance agent from selling insurance policies to the insurer`s customers for an 18-month period. Although the effects of this case are still fully visible, the decision proposes that, to be applicable, non-competition prohibitions be made in order to prohibit a worker from performing the same activity as the employer during the duration of the competition, rather than being more suited to prohibit the worker from performing only certain types of competitive activities. Like what. B the sale of products to the employer`s customers. Non-competition agreements, also known as anti-competitive or restrictive agreements, are employment contracts used by employers to limit an employee`s ability to compete with the employer by stealing customers or trade secrets. Enforceable agreements must strike a balance between protecting the employer`s legitimate business interests from an unfair competitive advantage and the worker`s right to work in a sector for which he or she is trained.
In general, the courts decide what is deemed appropriate or inappropriate by examining the nature and size of the business, the duration and geographic area of the application of the restrictions, and whether the worker received a reasonable consideration or benefit at the time the contract was signed.