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Enforcement of Non-Competition Clauses in
Employment Contracts – North Carolina
Of the states neighboring Virginia, North Carolina is among the closest to Virginia's
employer-friendly legal setting for enforcement of non-competition clauses. As in Maryland,
the courts in North Carolina are quite concerned with an employee's ability to make a
living. As such, they look particularly harshly on clauses that impose undue hardship on
the former employee. As in West Virginia, continued employment is not sufficient
consideration to sustain a restrictive covenant that is signed after employment has begun.
And like Maryland, West Virginia, and Tennessee, North Carolina courts employ a version
of the "blue pencil" approach to covenant enforcement, though they initially utilized the "all
or nothing” approach, like Virginia.
Doctrinally, North Carolina courts examine a number of factors when determining the
reasonableness of a non-competition clause. In Asheville and Associates v. Miller, the
court found that, "such covenants will be enforced if they are no broader than reasonably
necessary for the protection of the employer's business and do not impose undue hardship
on the employee, due regard being given the interests of the public." 121 S.E.2d 593 (N.C.
1961); see also Harwell v. Heim, 173 S.E.2d 316 (N.C. 1970) (presenting a similar
formulation of the doctrinal test for determining the reasonableness of a non-competition
clause). It does not seem matter whether the employee quit or was fired because as a
general rule the doctrinal test does not vary with the method of termination.
In 1944, the Supreme Court of North Carolina refused to enforce a non-competition
agreement between a deliveryman/bill collector and his employer because of the unduly
harsh nature of the covenant. Kadis v. Britt, 29 S.E.2d 543 (N.C. 1944). After working for
the plaintiff for several years, the defendant signed an agreement prohibiting him from
having any interest in "any firm or corporation engaged in any business or businesses
such a