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It is important to note that courts recognize a distinction between restrictive covenants as they relate to the ordinary commercial transaction involving business or property transfers and those which relate to employment contracts entered into by wage earners. A different measure of reasonableness is used. The test applied is whether or not the restraint is necessary for the protection of the business or good will of the employer, and if so, whether the stipulation has imposed upon the employee any greater restraint than is reasonably necessary to protect the employer's business, regard being had to the nature and character of the employment, the time for which the restriction is imposed, and the territorial extent of the locality to which the prohibition extends.
William Bennett worked for Storz Broadcasting Company under a contract with a restrictive covenant. Upon being notified that his contract was not to be renewed, but that he could remain working for a large reduction in his salary, Bennett entered into contract negotiations with another radio station, KSTP, within the covenant-restricted area of Storz’ station. Storz notified KSTP that it would face legal proceedings if Bennett was hired, so KSTP subsequently withdrew from negotiations. Bennett filed suit claiming tortious interference by Storz with an employment agreement. The trial court granted summary judgment to Storz.
Did the record establish that the restrictive covenant was enforceable or that the economic interest of Storz would be affected by Bennett’s employment with another justifying the grant of summary judgment to Storz?
The court found that the record did not establish that the restrictive covenant was enforceable or that the economic interest of Storz would be affected by Bennett’s employment with another. Because there were important fact questions to resolve first, before holding that there was justification for the restrictions, the decision granting summary judgment was reversed.