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Can I require employees to sign non-compete agreements in Michigan? What are the requirements?
Yes, employers can require employees to sign non-compete agreements in Michigan, subject to certain requirements.
Requirements for Non-Compete Agreements in Michigan
Michigan law allows employers to obtain non-compete agreements from employees to protect their reasonable competitive business interests [1.1]. To be enforceable, the agreement must be reasonable as to its duration, geographical area, and the type of employment or line of business [1.1].
If the agreement is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited [1.1].
The law applies to covenants and agreements which are entered into after March 29, 1985 [1.1].
Other Relevant Requirements
There are other requirements that employers in Michigan must comply with, depending on their industry and the nature of their business. For example, if an employer is a professional employer organization (PEO), they must maintain a minimum of $100,000 in working capital or provide a bond, irrevocable letter of credit, or securities with a minimum market value of $100,000 [2.1].
Additionally, personnel agencies in Michigan must comply with certain requirements for licensure, including providing a surety or cash bond, demonstrating good moral character for each owner, officer, or partner, and designating an employment agent or consulting agent licensed or seeking licensure under section 1004 [4.1].
Conclusion
Employers can require employees to sign non-compete agreements in Michigan, but the agreements must be reasonable as to their duration, geographical area, and the type of employment or line of business. Employers in certain industries, such as PEOs and personnel agencies, must also comply with additional requirements. If you have further questions or concerns, it is recommended that you consult with a legal professional.
Source(s):
- [1.1] Agreement or covenant protecting business interests of employer; applicability of section.
- [2.1] Working capital; requirements.
- [4.1] Personnel agency license; requirements for issuance; nonresident applicant; obtaining license for each office; designating on-site agent; displaying license.
Jurisdiction
Michigan