Non-Compete Agreements: Louisiana Takes Another Step Forward
Louisiana's non-competition statute, La. R.S. 23:921, was amended effective August 15, 2008, to provide additional situations in which non-competition agreements may be enforced. The recent amendments allow for the enforcement of certain non-competition and non-solicitation agreements between a corporation and its individual shareholders; between a partnership and its individual partners; and between a limited liability company and its individual members.
Shareholders, partners and LLC members may agree to refrain from carrying on or engaging in a business similar to that of the corporation, partnership or LLC and from soliciting customers of the business. Among other requirements, such agreements cannot exceed a period of two years from the date the relationship between the parties ceases. In addition, such agreements must be limited in geographic scope to specified parish or parishes, municipality or municipalities, or parts thereof, in which the business of the corporation, partnership or LLC is carried on.
As with other types of non-competition and non-solicitation agreements, we anticipate the courts will enforce only those agreements which meet the strict wording of statute. Thus, it is extremely important that special care be taken in the drafting of such agreements.