Thank You For Submiting Feedback!
Restrictive covenants in an employment contract, whereby an employee as a part of his agreement undertakes not to compete with his employer upon leaving the employment, will be upheld if the restraint is confined within limits which are no wider as to area and duration than are reasonably necessary for the protection of the business of the employer and do not impose undue hardship on the employee or disregard the interests of the public.
Appellee, Riggs-Warfield-Roloson, Inc., a licensed general insurance broker, filed a bill of complaint to enforce an employer-employee restrictive covenant. Appellant, Frank C. Tuttle, was employed as a salaried producer, and at the time of his employment, there was no written contract but both parties agreed that after termination of appellant’s employment, he would refrain from attempting to solicit any of appellee’s clients for two years. After a full hearing, the lower court issued an order enjoining the appellant from engaging in insurance activities with the appellee's customers and ordered appellant to pay the appellee the sum of commissions paid to him since the termination of his employment with respect to a particular policy. Appellant appealed the judgment.
Was the restrictive covenant filed by appellee to be enforced, valid?
The court affirmed the lower court’s judgment. The court held that the restrictive covenant was a valid and subsisting agreement at the time of the wrongs complained of, and that the agreement was reasonable as to time and scope. Also, the language of the covenant prevented appellant from participating in any type of insurance activity. Thus, the court found that the facts presented sufficiently established a breach of the restrictive covenant.