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Establish Employment Relationship Before Noncompete Agreement

June 30, 2022


A recent opinion from the United States Court of Appeals for the Fifth Circuit, applying Louisiana’s restrictive law governing noncompetition agreements, reminds employers of the importance of establishing an employee-employer relationship before entering into noncompetition agreement.

In Rouses Enterprises, LLC v. Clapp, the Fifth Circuit ruled that Louisiana law does not allow an employer to enforce a noncompete agreement signed by a prospective employee.

James Clapp signed a noncompetition agreement shortly after interviewing for a position with the company, but before the company had extended an offer of employment. The noncompetition agreement was part of an onboarding package of materials.

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