Employers do not want employees they have trained and provided with proprietary business information to leave and go to work for competitors. Buyers who purchase businesses do not want the sellers to start new, competing businesses. Thus, employment and sale-of-business agreements often contain noncompete covenants. Such covenants may or may not be enforceable, and the answer may depend on the state in which the agreement is executed and performed.

Some states are far more restrictive than others with regard to the enforceability of noncompete covenants, and this creates issues for interstate businesses. For example, which state’s law governs an agreement between an employee who lives in Florida but whose job mainly involves work in Georgia and Alabama and a company that is headquartered in New York but does business nationwide? The answer is often unclear and the subject of litigation.