Is this restrictive covenant enforceable?

January 20, 2006

I've been offered an employment contract with a provision that requires me to compensate my employer $100,000 if I quit and set up practice within a 7 mile radius of either of his two offices, which are 5 miles apart. These restrictions don't sound fair to me. Are they enforceable?

Q: I've been offered an employment contract with a provision that requires me to compensate my employer $100,000 if I quit and set up practice within a 7 mile radius of either of his two offices, which are 5 miles apart. These restrictions don't sound fair to me. Are they enforceable?

A:Very likely. Restrictive covenants are enforceable in most states as long as they're reasonable. The $100,000 you'd have to pay for breaching the covenant probably is a reasonable remedy for the damages the practice would suffer because of your competition.

The size of the restricted area depends on population density and how many medical practices are there already. But the 7 miles in your contract sounds reasonable if you're in a suburban location, for example.