Changing jobs should be an exciting opportunity, but employment agreements can complicate the process. Many Michigan employees are surprised to learn that a document they signed years ago may limit where they can work or who they can contact after leaving a company. Understanding these restrictions before making a career move can help you avoid costly mistakes.

Two of the most common restrictive covenants are noncompete agreements and nonsolicitation agreements. While the terms are often used interchangeably, they are not the same. Each serves a different purpose and is evaluated differently under Michigan law. Knowing the difference can help you protect your career while making informed decisions about your next opportunity.

What Is a Noncompete Agreement?

A noncompete agreement is a contract that limits an employee's ability to compete with a former employer after leaving a job. Employers often include these provisions in employment contracts, severance agreements, or executive compensation packages.

The goal is to protect legitimate business interests, such as confidential information, customer relationships, or specialized training. However, not every noncompete agreement is enforceable simply because an employee signed it.

How Noncompete Agreements Work

A noncompete agreement typically restricts an employee from working for a competing business for a certain period. It may also limit where the employee can work or the type of work they can perform.

Depending on the agreement, restrictions may include:

• Accepting employment with a direct competitor
• Starting a competing business
• Performing similar work within a defined geographic area
• Working in a similar role for a specified amount of time

Common Industries That Use Noncompete Agreements

Noncompete agreements appear in many industries across Michigan. While executives often sign them, they are not limited to upper management.

Common examples include:

• Sales professionals
• Healthcare providers
• Engineers
• Information technology employees
• Financial professionals
• Manufacturing employees
• Business executives

What Is a Nonsolicitation Agreement?

A nonsolicitation agreement is generally more limited than a noncompete agreement. Instead of preventing someone from working for a competitor, it restricts certain business relationships after employment ends.

Many employers use nonsolicitation agreements to protect customer goodwill and workforce stability.

Types of Nonsolicitation Clauses

Not every nonsolicitation agreement covers the same activities. Some focus on customers, while others protect employees or business partners.

Common restrictions include:

• Contacting former customers to move their business
• Recruiting former coworkers to join a new employer
• Soliciting vendors or suppliers
• Encouraging clients to terminate existing business relationships

Which Agreement Is More Restrictive?

In many situations, a noncompete agreement places greater limits on future employment. It may restrict an employee from working in an entire industry or geographic area for a period of time.

A nonsolicitation agreement usually allows someone to continue their career. It simply limits certain competitive activities after leaving an employer.

Even so, both agreements can have a significant impact on your career. Their enforceability depends on the language used and the specific facts of each case.

Are Noncompete Agreements Enforceable in Michigan?

Many employees assume that every noncompete agreement is automatically enforceable. That is not always true.

Michigan law allows employers to use reasonable noncompete agreements that protect legitimate business interests. Courts carefully examine each agreement to determine whether the restrictions are appropriate under the circumstances.

What Courts Consider

Michigan courts may evaluate several factors, including:

• Whether the employer has a legitimate business interest to protect
• The length of the restriction
• The geographic area covered
• The type of work being restricted
• Whether the agreement goes further than necessary

Legitimate Business Interests

Employers cannot restrict competition simply to prevent employees from earning a living elsewhere.

Instead, they typically must show a legitimate interest, such as protecting:

• Trade secrets
• Confidential business information
• Customer relationships
• Specialized training or proprietary knowledge

Reasonable Duration

The amount of time covered by a noncompete agreement should be reasonable under the circumstances.

Courts often examine whether the restriction lasts only as long as necessary to protect the employer's interests.

A restriction lasting several months may be viewed differently than one lasting several years.

Geographic Limitations

The geographic scope should also be reasonable.

For example, restricting competition within a local market may be easier to justify than prohibiting employment across the entire country.

Whether a geographic restriction is reasonable depends on the nature of the employer's business and the employee's role.

Scope of Restricted Work

The agreement should also match the work the employee actually performed.

An agreement preventing someone from performing any type of work for a competitor may be more difficult to justify than one limited to similar job duties.

Courts often look at whether the restriction protects legitimate business interests without unnecessarily limiting future employment.

Are Nonsolicitation Agreements Easier to Enforce?

In many cases, courts view nonsolicitation agreements more favorably than broad noncompete agreements. That is because they often impose fewer restrictions on an employee's ability to work.

Instead of preventing someone from earning a living, these agreements usually focus on protecting customer relationships and business goodwill.

Why Employers Use Nonsolicitation Agreements

Employers often rely on nonsolicitation provisions because they can protect valuable business relationships without broadly restricting future employment.

These agreements may help protect:

• Long standing customer relationships
• Existing clients
• Experienced employees
• Confidential business information

When a Nonsolicitation Agreement May Not Be Enforceable

Not every nonsolicitation agreement will hold up in court.

Problems may arise if the agreement:

• Lasts longer than reasonably necessary
• Restricts relationships unrelated to the employee's job
• Is broader than needed to protect the employer
• Uses vague or overly broad language

What Happens If You Violate a Noncompete or Nonsolicitation Agreement?

Violating a restrictive covenant can lead to legal action. However, every dispute does not end in a courtroom.

Some employers choose to negotiate, while others aggressively pursue enforcement.

Possible Legal Consequences

An employer may seek:

• A court order preventing certain activities
• Financial damages
• Recovery of profits in some situations
• Attorney fees if allowed by contract or law

Before You Change Jobs

If you signed a restrictive covenant, it is wise to understand your obligations before accepting a new position.

Consider taking these steps:

• Review your employment agreement carefully.
• Keep copies of all signed documents.
• Avoid taking confidential information.
• Do not assume the agreement is unenforceable.
• Speak with an employment attorney if you have concerns.

Should You Sign a Noncompete or Nonsolicitation Agreement?

Many employees receive restrictive covenants on their first day of work. Others receive them during promotions or as part of a severance package.

Before signing, take the time to understand how the agreement could affect your future career.

Questions to Ask Before Signing

Consider asking:

• What business interest is this agreement protecting?
• How long will the restrictions last?
• Where do the restrictions apply?
• Which customers or employees are covered?
• Can any terms be negotiated?

Don't Assume Every Agreement Is Standard

Many people believe these agreements are nonnegotiable.

In reality, employers sometimes agree to revise language, shorten restrictions, or clarify confusing provisions. Having an attorney review the agreement before signing can help you understand your options.

Protect Your Career Before You Make Your Next Move

Restrictive covenants can influence where you work, who you contact, and how you build your career after leaving an employer. Understanding the difference between a noncompete agreement and a nonsolicitation agreement is an important first step when evaluating your legal rights.

If you are planning to change jobs or have questions about an agreement you signed, do not rely on assumptions or internet rumors. Every employment contract is different, and even small differences in wording can affect your options. Taking the time to understand your agreement now may help you avoid unnecessary legal disputes later.

Speak With Batey Law About Your Employment Agreement

Whether you are considering a new job, reviewing a severance package, or responding to a former employer, experienced legal guidance can make a meaningful difference. A careful review of your agreement can help you understand what the contract actually says and whether its restrictions may be enforceable under Michigan law.

At Batey Law, employment law is the firm's sole focus. Attorney Scott Batey has spent decades helping Michigan employees navigate complex workplace issues and protect their rights with practical, straightforward advice.

Batey Law Firm, PLLC
30200 Telegraph Rd., Suite 400
Bingham Farms, MI 48025

Phone: 248-540-6800