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Oklahoma Non-Compete Agreement Template

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An Oklahoma non-compete agreement is a document that contains restrictive provisions that limit one signing party’s ability to compete professionally with the other. When signed, an individual agrees not to solicit a former employer’s employees, independent contractors, or established customers. Additionally, Oklahoma non-compete agreements (NCAs) may be used in the dissolution of a partnership or in the sale of a business, as long as the territorial restrictions are reasonable. Any agreement that attempts to prevent someone from carrying out their profession is unenforceable in Oklahoma, which means most employee-employer non-compete agreements are void. However, employees can be asked to execute an agreement that prohibits them from soliciting their employer’s established customers post-termination.

Contents

Enforceability in Oklahoma

In most employment scenarios, non-compete agreements are not enforceable in Oklahoma, as state law prohibits any contract that restricts an employee from carrying out their profession, trade, or business.[1] However, there are a few exceptions wherein an agreement may be enforced. Oklahoma courts will deem a restraint reasonable if it:

1. “Is no greater than is required for the employer’s protection from unfair competition;
2. Does not impose undue hardship on the employee; and,
3. Is not injurious to the public.”[2]

When it IS Enforceable

  • Solicitation of customers. A former employee may be restricted from selling goods or services to their former employer’s established customers.[3]
  • Sale of the goodwill of a business. An agreement may be made to restrict the seller of a company from establishing or entering a similar business within a specified city, town, or county.[4] 
  • Dissolution of a partnership. Partners may agree to refrain from carrying out comparable business operations within the same or contiguous county, city, or town when the partnership dissolves.[5]

When it’s NOT Enforceable

  • Practicing law. Lawyers may not offer or enter any agreement that restricts their right to practice law when employment is terminated.[6]

Maximum Time Period

No time restrictions are mentioned explicitly in Oklahoma statutes. Oklahoma courts consider each case’s circumstances and facts to determine whether the duration of the non-compete period is reasonable. The court has shown to enforce favor agreements with two (2) year limits or less,[7][8] but tends to find terms of three (3) or more years excessive.[2]

Geographical Area

An NCA signed in the sale of a business or dissolution of a partnership is enforceable if the applicable geographical area is limited to a specified town or city, or to a particular county and bordering counties.[4][5] Oklahoma courts have generally found agreements with too broad of a radius to be unreasonable.

For example, in the case of Cohen Realty, Inc. v. Marinick, the Oklahoma Supreme Court did not uphold an agreement where a real estate broker was prohibited from competing within an unlimited geographical area by his former employer.[9]

In the case of Cardiovascular Surgical Specialists, Corp. v. Mammana, the restrictive covenants barred Doctor Mammana from working within a twenty-mile radius of the CSS offices, however, it was discovered that the closest hospitals further than that radius were 100 miles away. The Oklahoma Supreme Court found these limitations too restrictive.[10]

Consideration

Consideration is what an individual will receive as the value in return for signing a non-compete agreement. For example, the money received in the sale of the goodwill of a business in exchange for not competing with that business. In Oklahoma, whenever there is a written instrument, consideration will be presumed,[11] meaning, that when the agreement is signed, it is assumed both parties have agreed that the value exchanged for the restrictive covenants will be acceptable.

Sources

  1. Okla. Stat. tit. 15 § 217
  2. Loewen Group Acq. v. Matthews, 12 P.3d 977, 2000 OK Civ. App. 109 (Okla. Civ. App. 2000)
  3. Okla. Stat. tit. 15 § 219A
  4. Okla. Stat. tit. 15 § 218
  5. Okla. Stat. tit. 15 § 219
  6. OK ST RPC Rule 5.6
  7. Tatum v. Colonial Life & Accident Insurance Co. of America, 465 P.2d 448, 1970 OK 27 (Okla. 1970)
  8. Speech and Hearing Center v. Baughman, 996 P.2d 939, 940-41, 1998 OK Civ. App. 122 (Okla. Civ. App. 1998)
  9. Cohen Realty, Inc. v. Marinick, 817 P.2d 747, 749, 1991 OK Civ. App. 71 (Okla. Civ. App. 1991)
  10. Cardiovascular Surgical Specialists, Corp. v. Mammana, 61 P.3d 210, 2002 OK 27 (Okla. 2002)
  11. Okla. Stat. tit. 15 § 114
  12. Martin & Fay, Inc. v. Pickard, 780 P.2d 1170-72 OK 122 (Okla. 1989)

Related Forms

Oklahoma Non-Disclosure Agreement – Business owners may use this form to share proprietary information with employees or partners while keeping it confidential.

Download: PDF, Word (.docx), OpenDocument

 


Frequently Asked Questions

Is blue penciling allowed in Oklahoma?

Yes, courts may modify portions of the agreement, including the prohibited activities and the geographical and time restrictions,[10] but cannot add contract terms that are not already in the agreement.[12]