What Version of Louisiana Law Governs Your Non-Compete Agreements?
In today’s competitive marketplace, non-compete agreements can be a valuable tool for your company. They prevent individuals from learning your business and then leaving with your company information to compete with you. To protect your business interests, and in order to enforce your agreements, you need to know which version of Louisiana law governs your non-compete agreements.
The validity and enforceability of non-compete agreements in Louisiana is controlled by a single statute, La. R.S. 23:921. Louisiana case law is clear that the version of La. R.S. 23:921 in effect at the time your non-compete agreement was executed controls.
Effective August 1, 2020, La. R.S. 23:921 D was legislatively amended. This amendment affects non-compete agreements used between corporations and shareholders, partnerships and partners, and limited liability companies and their members. The August 1, 2020 amendment expanded the reach of these non-compete agreements.
Prior to the amendment, a corporation, partnership and a limited liability company could stop a shareholder, partner or member from opening their own competing business with an otherwise valid non-compete agreement. However, it could not stop them from going to work for an established competitor. After the effective date of the amendment, these entities can now stop a shareholder, partner or member with an otherwise valid non-compete agreement from opening their own competing business and/or from going to work for an established competitor.
For complete protection, any corporation/shareholder, partnership/partner, or limited liability company/member agreements containing non-compete provisions, executed prior to August 1, 2020, should be re-executed to take advantage of the amendment to La. R.S. 23:921 D. Otherwise, those agreements executed prior to August 1, 2020, are subject to the old law which fails to offer complete protection.