Employee Non-Compete Agreement and Enforceability Memo — Mississippi

MISSISSIPPI Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

MEMORANDUM

To: [________________________________]
From: [________________________________], Mississippi Bar No. [_____]
Date: [__/__/____]
Re: Enforceability of Non-Compete Under Mississippi Common Law — [EMPLOYEE NAME]

I. Executive Summary

Mississippi has no general non-compete statute. The enforceability of the attached covenant is analyzed under common-law reasonableness as articulated in Frierson v. Sheppard Bldg. Supply Co., 247 Miss. 157 (1963), Empiregas, Inc. of Kosciusko v. Bain, 599 So. 2d 971 (Miss. 1992), and related authority. Mississippi courts will enforce reasonable covenants and judicially reform overbroad geographic provisions but will not save covenants that impose oppressive burdens, particularly following bad-faith employer termination.

Bottom-line assessment: ☐ Likely enforceable as drafted ☐ Likely enforceable after judicial reformation ☐ Voidable risk — redraft recommended

II. Governing Common-Law Standard

Mississippi balances three interests:

1. Employer's interest in protecting goodwill, customer relationships, trade secrets, training, and confidential information;
2. Employee's interest in earning a living in chosen profession; and
3. Public's interest in access to services and free competition.

Three reasonableness dimensions:

(a) Geographic scope — must be tied to actual area of employer's business and employee's activity;
(b) Duration — typically 1–5 years for non-medical; longer in specialized industries with facts to justify;
(c) Scope of activity — must be limited to activity that competes with employer.

III. Application to [EMPLOYEE NAME]

IV. Bad-Faith Termination Risk (Empiregas)

If Company terminates Employee without cause, in bad faith, or in retaliation, Empiregas (1992) supports a defense that the covenant should not be enforced on equitable grounds. By contrast, where Employee resigns, this defense generally is unavailable. See 2018 S.D. Miss. case applying this distinction. Document the termination basis carefully if separation occurs.

V. Judicial Reformation

Mississippi courts have reformed overbroad geographic scopes (e.g., from statewide to 50-mile radius around Tupelo where employee's actual work was around Tupelo). See Texas Road Boring (1967). Courts will not, however, rewrite wholesale or supply missing terms.

VI. Physician Non-Competes

Mississippi has no statute specifically governing physician non-competes. The general common-law balancing test applies, but the public-interest prong is weighted more heavily where patient access to specialized care could be impaired. Best practice is narrower geography, shorter duration, and patient-list/non-solicitation alternatives. Miss. Code Ann. § 73-25-29 governs physician unprofessional conduct but does not directly regulate non-competes.

VII. Federal Overlay

FTC Non-Compete Rule, 16 C.F.R. Part 910 — verify status before relying.

VIII. Recommendation

☐ Execute as drafted
☐ Modify before execution: [________________________________]
☐ Do not execute — overbroad / public-interest concern

Part B — Non-Compete Agreement

EMPLOYEE NON-COMPETITION AGREEMENT
(Governed by Mississippi Law)

This Agreement is entered into as of [__/__/____] between [EMPLOYER LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [________________________________] ("Company"), and [EMPLOYEE NAME], date of birth [__/__/____], residing at [________________________________] ("Employee").

Capacity review. Mississippi generally defines persons under twenty-one as minors, subject to statutory exceptions. Watercolor Salon LLC v. Hixon held that an ordinary employment agreement containing a noncompetition covenant affected the employee's right to work rather than personal property and therefore did not fit § 93-19-13's personal-property contract exception. The 2023 amendment added mortgages and real-property contracts to that exception but did not state that ordinary employment agreements qualify. If Employee is under twenty-one, Mississippi counsel must confirm a current capacity basis or court-ordered removal of disability before execution.

1. Recitals

Company is engaged in [________________________________] ("Business") in Mississippi and operates from [________________________________]. Employee will receive Confidential Information, customer goodwill, and specialized training.

2. Consideration

In exchange for Employee's covenants, Company provides: ☐ Initial offer of employment ☐ Continued employment ☐ Sign-on bonus of $[_____] ☐ Promotion ☐ Equity ☐ Access to Confidential Information. Employee acknowledges this consideration is adequate.

3. Definitions

4. Non-Competition Covenant

During the Restricted Period and within the Restricted Territory, Employee shall not engage in the Restricted Business in a capacity substantially similar to Employee's role with Company.

5. Customer Non-Solicitation

During the Restricted Period, Employee shall not solicit or accept business from any Customer for the purpose of providing competing services.

6. Employee Non-Solicitation

During the Restricted Period, Employee shall not solicit, recruit, or hire any then-current Company employee with whom Employee worked in the final 12 months.

7. Confidentiality

Employee shall hold Confidential Information in trust and shall not use or disclose it except for Company's benefit. Trade-secret protections survive indefinitely under the Mississippi Uniform Trade Secrets Act.

8. Reasonableness Acknowledgment

Employee acknowledges that the geographic scope, duration, and scope of activity are reasonable, are necessary to protect Company's legitimate business interests, and do not unduly burden Employee or harm the public interest, consistent with Frierson v. Sheppard Bldg. Supply Co., 247 Miss. 157 (1963).

9. Good-Faith Termination Covenant

Company covenants that any termination of Employee will be in good faith. The parties acknowledge that under Empiregas, Inc. of Kosciusko v. Bain, 599 So. 2d 971 (Miss. 1992), bad-faith termination by Company may render the restrictions in Sections 4–6 unenforceable on equitable grounds.

10. Judicial Reformation

If a court finds any restriction unreasonable as to time, geography, or scope, the court is requested to reform the offending restriction to the minimum extent necessary to render it enforceable, consistent with Texas Road Boring Co. v. Parker, 194 So. 2d 885 (Miss. 1967).

11. Remedies

Employee acknowledges that breach will cause irreparable harm not adequately remediable by money damages. Company is entitled to seek temporary, preliminary, and permanent injunctive relief, in addition to damages.

12. Governing Law and Venue

This Agreement is governed by Mississippi law. Exclusive venue lies in the Chancery Court of [______] County, Mississippi, or the U.S. District Court for the [Northern/Southern] District of Mississippi.

13. Severability, Survival, Integration

Unenforceable provisions are severable. Sections 4–11 survive termination. This is the entire agreement on this subject.

SIGNATURES

Part C — Pre-Signing Checklist

☐ Geography tied to actual area of Employee's services (radius from specific location, not statewide unless justified)
☐ Duration aligned to industry norms (1–2 years typical; longer requires specialized-industry facts)
☐ Scope of activity narrowed to actual competing activity
☐ Protectable interest documented (goodwill, trade secrets, confidential info, training)
☐ Consideration documented
☐ Employee's age and legal capacity confirmed; if under 21, Mississippi counsel documented the specific enforceability basis
☐ For physicians: consider narrower geography (e.g., one-county or 25-mile); add public-interest accommodation language; consider patient-choice carve-out
☐ Confirmed Employee is not a Mississippi-licensed attorney (Rule 5.6 prohibits)
☐ Good-faith termination covenant included to mitigate Empiregas risk
☐ Judicial reformation clause (not blue-pencil) included
☐ Companion non-solicit and confidentiality agreement in place
☐ Mississippi Uniform Trade Secrets Act referenced
☐ FTC Non-Compete Rule status verified
☐ Employee given reasonable opportunity to consult counsel
☐ Choice of law: Mississippi; venue: Mississippi chancery court
☐ Signed copies retained in personnel file

Sources and References

• Frierson v. Sheppard Bldg. Supply Co., 247 Miss. 157, 154 So. 2d 151 (1963) — https://law.justia.com/cases/mississippi/supreme-court/1963/42695-0.html
• Bagwell v. H.B. Wellborn & Co., 247 Miss. 564, 156 So. 2d 739 (1963)
• Donahoe v. Tatum, 242 Miss. 253, 134 So. 2d 442 (1961)
• Empiregas, Inc. of Kosciusko v. Bain, 599 So. 2d 971 (Miss. 1992)
• Texas Road Boring Co. of La.-Miss. v. Parker, 194 So. 2d 885 (Miss. 1967)
• Watercolor Salon LLC v. Hixon, No. 2021-IA-01151-SCT (Miss. Dec. 1, 2022) (official opinion)
• Mississippi S.B. 2073 (2023), §§ 1-2 and 12 (official signed bill; effective July 1, 2023)
• Miss. Code Ann. § 73-25-29 (physician unprofessional conduct)
• Mississippi Uniform Trade Secrets Act, Miss. Code Ann. §§ 75-26-1 et seq.
• Miss. R. Prof'l Conduct 5.6 (attorney non-competes prohibited)
• "Everything You Need to Know (and Probably Don't) About Mississippi Non-Competes" — https://www.jdsupra.com/legalnews/everything-you-need-to-know-and-88281/
• FTC Non-Compete Rule, 16 C.F.R. Part 910