Multinational corporations, including the Whirlpool Corporation located in Benton Harbor, Michigan, often request (or demand) their employees sign non-compete agreements.
Non-compete agreements are a contract between an employer and employee. The contract typically restricts an employee’s ability to leave his or her current position to join a similar or competing business. Many times the contract also places restrictions on the use of confidential information obtained through the individual’s current employment.
Yes, but there are limits. Non-compete agreements are enforceable in Michigan under MCL § 445.774a to the extent they are reasonable. Michigan’s statute provides that an employer may obtain from an employee an agreement or covenant which protects an employer’s reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
Often times employers intentionally draft non-compete agreements that cross the line. Whirlpool Corporation has previously drafted and required employees to sign noncompete agreements that, in part, have been ruled unenforceable. See Whirlpool Corp v Burns, 457 F Supp 2d 808 (WD MI 2006).
In Whirlpool Corp v Burns, the Western District of Michigan addressed a non-compete agreement that Whirlpool had required a former manager to sign. The court’s analysis focused on whether the restrictions were reasonable in scope, duration, and geographic reach. The court found portions of the agreement unenforceable, illustrating a recurring problem with large employer non-competes: when in-house counsel or HR departments draft these agreements, they often do so with the employer’s maximum protection in mind, without adequately tailoring the restrictions to the specific employee’s role and the legitimate business interests actually at stake.
Under Michigan law, courts apply a reasonableness standard to non-compete agreements rather than a per se prohibition. This means that an overly broad non-compete is not automatically void — courts have the discretion to modify or “blue-pencil” unreasonable restrictions to bring them within enforceable limits. This judicial flexibility creates an important practical point for employees: even if a non-compete appears extremely restrictive on its face, it may be judicially reduced to a narrower scope that is still enforceable. The only way to know for certain is to have the agreement reviewed by an attorney before you sign — or, if you have already signed, before you take an action that could be characterized as a violation.
Michigan courts evaluate non-compete reasonableness under a three-part inquiry: (1) duration — how long does the restriction last? (2) geographic scope — in what geographic area does the restriction apply? and (3) scope of activities — what types of employment or business activities are restricted? Restrictions that exceed what is necessary to protect the employer’s legitimate interests in any of these dimensions are subject to modification or invalidation.
In terms of duration, restrictions of one to two years are generally enforceable for mid-level employees. Longer restrictions may be appropriate for senior executives with access to highly sensitive information. In terms of geographic scope, a restriction limited to the territory in which the employee actually worked or had responsibility is more defensible than a global or national restriction applied to a regional employee. In terms of scope of activities, the restriction should be tied to the actual work the employee performed — a customer service representative should not be restricted from the entire industry.
In 2024, the Federal Trade Commission issued a final rule that would have banned non-compete agreements for most workers nationally. The rule was challenged in federal court, and the Fifth Circuit vacated it, holding that the FTC lacked statutory authority to issue such a sweeping prophylactic rule. The litigation over this rule continues to evolve, and the federal regulatory landscape for non-competes remains unsettled. Michigan employers and employees should monitor these developments, as federal legislation or further administrative rulemaking could significantly affect the enforceability of non-compete agreements in Michigan.
At the very least, you should understand the terms and conditions of the contract by consulting with an attorney before you sign. You may be able to negotiate the contract to narrow the geographic scope, shorten the duration, or clarify the definition of competitive activity. You may also be able to obtain additional consideration in exchange for a more restrictive agreement. Signing without understanding what you are agreeing to can limit your future employment options in ways you may not anticipate at the time of signing.
If you have already signed a non-compete agreement and are considering changing employment, consult with an attorney before taking any action that could be characterized as competitive activity. The risk of litigation for non-compete violations is real, and the costs — including injunctive relief that could prevent you from working in your field — can be significant.
If you have been asked to sign a non-compete agreement, or if you are an employer seeking to enforce one, contact Revision Legal today at 855-473-8474 or through our online contact form.
Non-compete agreements often work in conjunction with trade secret law. Michigan’s Uniform Trade Secrets Act (MCL § 445.1901 et seq.) and the federal Defend Trade Secrets Act (18 U.S.C. § 1836) protect confidential business information — including customer lists, pricing data, product formulas, and business strategies — from misappropriation. A non-compete agreement reinforces trade secret protection by restricting an employee’s ability to use confidential information acquired during employment at a competitor after departure.
However, courts are careful not to allow employers to use non-compete agreements as a substitute for legitimate trade secret protection. An employee cannot be restricted from using general skills and knowledge acquired through experience, even if those skills were developed during the employment relationship. The restriction must be tied to specific confidential information or customer relationships that are genuinely proprietary to the employer.
In Michigan, a non-compete agreement entered into at the start of employment is supported by consideration — the offer of the job itself. For existing employees asked to sign non-competes, additional consideration must be provided to make the agreement enforceable. This consideration might take the form of a promotion, a raise, a one-time bonus, or additional benefits. Courts have generally required that the consideration be something of actual value, not just continued employment. Working with an attorney before presenting a non-compete to an existing employee ensures that the consideration is adequate and that the agreement will be enforceable if challenged.
If you are an employer seeking to implement or enforce non-compete agreements, or an employee who has been asked to sign one, contact Revision Legal today at 855-473-8474 or through our online contact form.
Revision Legal is a national intellectual property and internet law firm that represents clients across the United States in trademark, copyright, trade secret, and internet law matters. We are a firm of specialists — not general practitioners who handle IP work as one component of a broad practice, but attorneys whose entire professional focus is on the intersection of technology, creativity, and commerce.
Our attorneys have handled cases at every level of the federal court system, including the United States Court of Appeals for the Federal Circuit, the Sixth Circuit, the Ninth Circuit, and before the Trademark Trial and Appeal Board. We manage trademark portfolios for hundreds of clients, ranging from individual entrepreneurs registering their first mark to publicly traded companies maintaining global trademark portfolios across dozens of countries.
We believe that access to expert legal counsel should not depend on the size of your organization. Revision Legal’s flat-fee service model for routine IP matters — trademark registration, copyright registration, DMCA notices, and standard licensing agreements — allows small businesses, startups, and individual creators to access the same quality of legal representation that larger companies receive, at a price that is predictable and fair. For complex litigation and contested proceedings, we work efficiently to achieve the best possible outcome for our clients while managing costs responsibly.
Whatever your intellectual property or internet law need — whether you are protecting a new brand, enforcing your rights against an infringer, defending against a legal demand, or navigating a complex licensing transaction — Revision Legal has the expertise to help. Contact us today at 855-473-8474 or through our online contact form to discuss your matter.
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