As of late, employers have been using non-compete provisions in their contracts with their employees with increasing frequency. A non-compete provision is part of a contract which prohibits a worker from going to work for a competitor of the employer after they leave the company’s employment. These provisions usually include a geographic radius and a time frame after termination of employment. Such provisions were initially used most often in tech companies, such as Apple and Google, who were afraid of employees taking trade secrets to their competitors. However, non-compete provisions have spread throughout the job market to include more and more positions in more and more companies.
Most recently, a college football coach, Bret Bielma, signed an employment contract with the University of Arkansas which included a Covenant Not to Compete. Having had a long and very successful career as the football coach at the University of Wisconsin, many people in the industry were surprised to see Bielma leave Wisconsin for Arkansas. However, college sports are becoming increasingly similar to their professional counterparts in the way that they compete for coaches and athletes. No doubt, the multi-million dollar contract that Arkansas offered Bielma played a role in his decision to change employers.
What was unusual about Bielma’s contract with the University of Arkansas was the Covenant Not to Compete which was included. It states that Bielma is not to coach another football team in the Southeastern Conference (SEC), in which Arkansas competes. The time limit on the non-compete is only as long as the coach’s contract with the University of Arkansas lasts: from December 4, 2012 to December 31, 2018. After that date, Bielma is free to coach any football team that he wants.
The contract points out that the University of Arkansas has a vested interest in Bielma’s coaching and that its legitimate business interests would be in jeopardy without this provision in Bielma’s contract. The agreement states, “The parties … agree that the competitiveness and success of the University’s football program affects the overall financial health and welfare of the Athletic Department and that the University maintains a vested interest in sustaining and protecting the well-being of its football program”. The contract further states that, “Coach understands and agrees that without such protection, the University’s interests would be irreparably harmed.”
The non-compete provision also gives Bielma relief from its restrictions in the event that his contract is prematurely terminated. According to the contract, “This covenant not to compete, however, shall not apply if the University exercises its right to terminate the Agreement for convenience or if the Coach terminates this Agreement for cause based upon the University’s material breach of this Agreement.”
The inclusion of a covenant not to compete illustrates the further broadening of non-compete contracts into a variety of industries. The University of Arkansas, like many other institutions, is trying to protect the substantial investment it has made in its football coach. This non-compete agreement provides the University of Alabama with preventive measures from Bielma abandoning them to coach a competing football team, as well as substantial leverage against any other university in the SEC that might want to lure Bielma away from Arkansas.
The business litigation attorneys at Lubin Austermuehle near Chicago and Oak Brook represent business owners and professionals regarding non-competition agreements and other claims throughout the Chicagoland area, including Cook, DuPage, Lake, Kane, McHenry and Will Counties; and in the Mid-West region, including Indiana, Wisconsin and Iowa. You can contact us by calling our toll free number 630-333-0333 for a consultation or contact us online by filling out the form at the side of this blog.