Updated July 29, 2022
A South Carolina non-compete agreement allows an employer to protect a legitimate business interest by restricting their ability to work in the same industry. A non-compete must also balance an employer’s legitimate interests and an employee’s right to use their talents to earn a living.
A non-compete is specifically restricted to a time and place.
Laws
Legally Enforceable?
Yes, a non-compete is legally enforceable if the non-compete is:
- Reasonable in the sense that it is no greater than is necessary to protect the employer’s legitimate business interest;
- From the standpoint of the employee, the restraint must be reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood;
- Partial or restrictive in its operation, either as to time or place;
- Supported by valuable consideration; and
- The restraint is reasonable from the standpoint of a sound public.
Source: Standard Register Co. v. Kerrigan (1961)
Balance Test
The Supreme Court has ruled a non-compete has a balance between the employer protecting themselves and the employee’s right to earn a living.
“While recognizing the legitimate interests of a business in protecting its clientele and goodwill, we are equally concerned with the right of a person to use his talents to earn a living.”
Source: Sermons v. Caine Estes Ins. Agency (1980)
Continued Employment
If a non-compete is presented to an employee after being hired, there must be “new consideration” presented such as their position or duties.
“If an employment relationship already exists without a covenant not to compete, any such future covenant must be based upon new consideration.”
Source: Poole v. Incentives Unlimited (1999)
Attorneys (prohibited)
An attorney is prohibited from entering into any type of agreement that restricts their right to practice law.
Source: Rule 5.6 (Restrictions on Right to Practice)
Maximum Term
3 years was deemed “not obnoxious” by the Supreme Court.
Source: Rental Uniform Service of Florence, Inc. v. Dudley (1983)
Blue Penciling
The courts have adopted a “blue pencil test” that disregards excessive restraints found in a non-compete if the agreement is severable. For example, a court is able to strike out unreasonable provisions in a non-compete if it includes a severability clause.
Source: Somerset v. Reyner (1958)