La. R.S. 23:921 is the applicable statute in regard to noncompetition agreements in Louisiana. Generally, noncompetition agreements are considered null and void, unless they specifically comply with the requirements set forth in that statute.
La. R.S. 23:921(C) requires that the restrictive covenant identify by name the parishes, municipalities, or parts thereof to which it applies. Recently, the Louisiana Fifth Circuit reviewed whether a catch-all phrase was permissible under the geographic scope of the noncompetition statute. Advanced Medical Rehab, L.L.C. v. Shelby Manton, 21-315 (La. App. 5 Cir. 2/23/2022). The noncompetition agreement in Advanced was limited to certain named parishes in Louisiana, but also included the phrase: “agreement will apply in any parish in which Advanced has a contract and/or has an existing marketing relationship with a clinic to provide marketing services during the term of this contract or any relationship thereafter.”
Shortly following the termination of the employment relationship between Advanced and the employee, Advanced sought a temporary restraining order and preliminary injunction after it learned that the employee was working for another Louisiana healthcare provider—which would have been deemed a competing business. The Louisiana Fifth Circuit held that the trial court correctly found that the noncompetition agreement was not enforceable in regard to its geographic scope. The Louisiana Fifth Circuit found that the catch-all phrase attempted to further restrict the employee from business activity in a manner that failed to comply with La. R.S. 23:921(c).
Advanced cited Causin in their reasoning for including the catch-all provision in the noncompetition agreement. Causin, L.L.C. v. Pace Safety Consultants, LLC, 2018-0706 (La. App. 4 Cir. 1/30/19), writ denied, 2019-0466 (La. 5/20/19), 271 So. 3d 203. The Louisiana Fifth Circuit distinguished the Louisiana Fourth Circuit’s 2019 decision in Causin because the noncompetition agreement in Causin, “included a provision for the former employer to expand the list of parishes by amending the current list, former employee being provided an option to dispute the amendment.” Contrary to Causin, the appellate court determined that the former employer in the present case had unilateral authority to claim additional parishes in order to further restrict the employment of the former employee.
In short, in order to best ensure that a noncompetition agreement is deemed enforceable by Louisiana courts, it is strongly recommended that you strictly adhere to La. R.S. 23:921.
