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Parties and cover-term identification
Review every item below the way a Michigan court would: the statute permits an employee covenant only when it protects a reasonable competitive business interest and stays reasonable in duration, geography, and the line of business it restricts, and a court asked to enforce more than that has discretion to trim the covenant — or to decline. For the question-by-question legal analysis behind these items, see the Michigan non-compete practice note.
Confirm the named employer is the entity that actually holds the competitive business interest the covenant claims to protect. Michigan tests the covenant against the employer's reasonable competitive business interests, so a covenant signed with a parent or affiliate that owns neither the customer relationships nor the confidential information starts the analysis on the wrong foot.
Every covenant clock — and the reasonableness of every duration — runs from a defined start date. An undated agreement also obscures whether the covenant was signed at hire or mid-employment, which is exactly the fact the consideration analysis later turns on.
Record the role and duties: they are the evidence of what confidential information and customer relationships the worker actually touches, and therefore of whether the covenant protects against an unfair competitive advantage or merely blocks ordinary competition.
Check that the governing state is stated. Restrictive-covenant law is jurisdiction-sensitive, and the governing-law and forum choices decide which framework the rest of this checklist is tested under — the forum mechanics get their own item near the end of the page.
Sources for this answer
Primary law · 1987-12-28
A.1 MCL § 445.774aMCL 445.774a supports testing the covenant against the employer's reasonable competitive business interests, which the named employer should actually hold.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Case law · 2006-05-24
A.2 St. Clair Medical, P.C. v. BorgielBorgiel supports using the worker's actual role as evidence of unfair competitive advantage rather than ordinary competition.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
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Definitions
Test the definition against the Michigan Supreme Court's measuring stick: a covenant is enforceable to the extent it reasonably protects the employer's confidential information, and unenforceable to the extent it reaches further. A definition that sweeps in everything the worker ever learned converts the protectable core into an overbreadth problem.
Keep Trade Secrets defined separately and aligned with the statutory definition: information deriving independent economic value from not being generally known, subject to reasonable secrecy efforts. The separate term is what lets trade-secret obligations run longer than ordinary confidentiality and what connects the agreement to the trade-secret act's remedies.
One defined Restricted Period keeps every duration auditable against the statute's reasonableness requirement. Michigan sets no numeric cap, so the question is always whether this duration is justified by this interest — a question that cannot be answered about a period scattered across clauses.
Tie the geography to where the protected interest actually operates. Michigan's leading overbreadth decision involved a restriction with no limit on duration or geography, and the court refused to treat the employer's preference as an unlimited right — open-ended territory language is the most visible mark of an unreasonable covenant.
Bound the class to customers the worker actually served or learned confidential information about during a stated look-back window. Customer relationships are a recognized competitive business interest, but an entire-book-of-business definition protects the employer from competition itself rather than from an unfair advantage.
Keep the no-poach class to colleagues the departing worker actually worked with or supervised during the look-back window. A workforce-wide definition turns a modest restraint into a hiring ban and invites the same reasonableness scrutiny the covenants face.
Name the interests concretely — confidential information, customer relationships, trade secrets — because the whole Michigan analysis keys to whether the covenant protects a reasonable competitive business interest. Recitals about competition in the abstract describe the thing the covenant may not protect against.
Describe the genuinely competing activity in concrete terms. The statute requires the type of employment or line of business restricted to be reasonable, and that limit does its work through this definition — anything-we-might-someday-do language fails it.
Where ownership or investment in competitors is restricted, look for a passive-holdings carve-out below a stated percentage. A clause that technically forbids index funds and ordinary public shares restrains far more than any competitive business interest requires — gratuitous overbreadth a reviewer should not let ride.
A drafting convenience, not a requirement — plenty of agreements inline the carve-out language instead. If the capitalized term appears, confirm its percentage matches the operative carve-out it supports.
Pin the term down so enforcement does not become a fact-by-fact dispute over who called whom. A definition limited to initiating contact is the narrower, more defensible shape; one that also captures passively receiving inquiries widens the restraint and the reasonableness exposure with it.
Verify the trigger covers resignation, dismissal, and expiration of a fixed term the same way. Every restricted-period clock runs from this event, and an ambiguous trigger leaves the covenant's duration — the first thing a Michigan court measures — indeterminate.
Sources for this answer
Case law · 1985-01-17
B.1 Follmer, Rudzewicz & Co., P.C. v. KoscoFollmer supports measuring the confidential-information definition against the rule that a covenant is enforceable only to the extent it reasonably protects confidential information.
To the extent such an agreement provides reasonable protection for the confidential information of the employer, it does not violate the statute and is enforceable.
See Follmer, Rudzewicz & Co., P.C. v. Kosco, 420 Mich. 394 (1984).
Primary law · 1998-12-30
B.2 MCL § 445.1902MCL 445.1902 supports aligning the contractual trade-secret definition with the statutory one, which keys protection to independent economic value from secrecy.
“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following: (i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
See MCL § 445.1902(d).
Primary law · 1987-12-28
B.3 MCL § 445.774aMCL 445.774a supports auditing the restricted period and the competitive-business definition against the statutory reasonableness limits on duration and type of employment or line of business.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Case law · 2016-02-18
B.4 Mid Michigan Medical Billing Service, Inc. v. WilliamsPDFMid Michigan Billing supports treating open-ended territory and duration language as the mark of an unreasonable covenant.
Although plaintiff argues that the expansive restriction is necessary to protect its business interests, plaintiff does not have an unlimited right to restrict the business choices of its clients.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
Case law · 2006-05-24
B.5 St. Clair Medical, P.C. v. BorgielBorgiel supports naming concrete protected interests, because the covenant must protect against an unfair competitive advantage rather than competition in the abstract.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
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Timing and execution acknowledgements
The timing acknowledgement should record whether the covenant came at hire or mid-employment and what the worker received for signing. Michigan accepts continued employment as consideration only in a genuine at-will setting — the leading case held a mid-employment covenant void because the workers were just-cause employees, so the recital should also document the employment status it relies on.
No Michigan statute demands it, but the acknowledgement earns its keep in onboarding packets: the Michigan Supreme Court recently subjected a term buried in an adhesion-style hiring agreement to reasonableness review, and evidence the worker had a real chance to get advice cuts against the take-it-or-leave-it characterization.
Sources for this answer
Case law · 2004-09-15
C.1 QIS, Inc. v. Industrial Quality Control, Inc.QIS states the rule that continued employment is sufficient consideration for a non-compete only in an at-will setting.
Mere continuation of employment is sufficient consideration to support a noncompete agreement in an at-will employment setting.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
Case law · 2004-09-15
C.2 QIS, Inc. v. Industrial Quality Control, Inc.QIS held the covenant void where just-cause employees received only continued employment, because refusing to sign would not have been just cause for termination.
Because defendants were “just cause” employees, however, the issue is whether defendants' refusal to sign the noncompete agreement would amount to “just cause” for their termination.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
Case law · 2025-07-31
C.3 Rayford v. American House Roseville I, LLCRayford supports reasonableness scrutiny of terms in adhesion-style onboarding agreements, which a counsel acknowledgement helps answer.
A shortened limitations provision contained in such an agreement must be examined for reasonableness.
See Rayford v. American House Roseville I, LLC, ___ Mich. ___ (2025) (Docket No. 163989).
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Confidentiality and trade-secret treatment
Trade-secret obligations should last as long as secrecy does — federal and Michigan law both key the right to continued secrecy, not to a contract year. A fixed expiry on trade-secret protection reads as a concession that the information stops being secret on schedule.
Give ordinary confidential information its own finite term. Michigan enforces confidentiality-based restraints only to the extent of reasonable protection, and a perpetual lid on non-secret information is the kind of further reach the enforceability line cuts off.
Sources for this answer
Primary law
D.1 Defend Trade Secrets Act — definition of a trade secret, 18 U.S.C. § 1839Federal law keys trade-secret status to continued secrecy, which is why contractual trade-secret protection should run as long as secrecy does rather than to a fixed date.
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
See 18 U.S.C. § 1839(3)(B) (2018).
Case law · 1985-01-17
D.2 Follmer, Rudzewicz & Co., P.C. v. KoscoFollmer supports keeping ordinary confidentiality obligations within reasonable bounds, since enforceability extends only as far as reasonable protection of confidential information.
To the extent such an agreement provides reasonable protection for the confidential information of the employer, it does not violate the statute and is enforceable.
See Follmer, Rudzewicz & Co., P.C. v. Kosco, 420 Mich. 394 (1984).
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Permitted disclosures and protected conduct
Federal law, fully applicable in Michigan: omit the immunity notice and the employer forfeits exemplary damages and attorney fees in a later federal trade-secret suit against the worker. For an agreement whose strongest protectable interest is often the trade secrets themselves, that is an expensive omission.
Confidentiality and non-disparagement language has to leave wages, hours, and working conditions discussable. Federal labor law protects that speech regardless of the governing state, and the Board has been striking overbroad clauses in employee agreements.
Confirm the carve-out for disclosure required by law, court order, or a government investigation, with notice to the employer where lawful. No confidentiality clause can override a subpoena; the carve-out plus notice procedure keeps the worker compliant without putting the clause itself in question.
Sources for this answer
Primary law
E.1 Defend Trade Secrets Act — employer immunity-notice requirement, 18 U.S.C. § 1833(b)The DTSA requires an employer to give notice of the trade-secret whistleblower immunity in any agreement governing the use of trade secrets or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A) (2018).
Primary law
E.2 NLRA Section 7 — protected concerted activity, 29 U.S.C. § 157Section 7 protects concerted activity including wage discussion — the statutory basis for the carve-out from confidentiality and non-disparagement restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection
See 29 U.S.C. § 157 (NLRA § 7).
Agency guidance · 2023-02-21
E.3 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that offering severance terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement terms — violates the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
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Property return and certification
Return-or-delete at separation, certified in writing. The certification doubles as evidence of the reasonable secrecy efforts trade-secret status depends on, and it is the cleanest contemporaneous record if protected material later surfaces at a competitor.
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Restrictive covenants (each independently includable)
Optional, and the least scrutinized covenant in the family when kept inside the Covered Employees class and the Restricted Period. Michigan authority on these clauses is thin, so the safe review posture is the general one: a clause that reads as a workforce-wide hiring ban draws the same reasonableness fire as a non-compete.
Optional, and naturally aligned with the interests Michigan protects: customer relationships and the confidential information behind them. Keep it scoped to Covered Customers for the Restricted Period — a non-solicit that follows every customer the employer has ever billed protects against competition, not unfair advantage.
Non-dealing bars serving covered customers even when they call first — a restraint on the customer's choice as much as the worker's conduct. The leading Michigan overbreadth case faulted exactly that move, holding the employer has no unlimited right to restrict the business choices of its clients, so treat inclusion as a deliberate risk decision.
Michigan permits a true non-compete, but only on the statute's terms: it must protect a reasonable competitive business interest and stay reasonable in duration, geography, and the line of business restricted. If the clause appears, route the review straight through the Michigan statutory gates at the end of this checklist before evaluating any of its terms.
When the employer can name its real competitors, the covenant should bind those instead of leaning on the open-ended Competitive Business definition. A named list is strong evidence the restraint targets an unfair advantage rather than competition at large — and it spares the employer from asking a court to exercise narrowing discretion it may withhold.
Rare and deliberate. Confirm the passive-holdings carve-out is intact and the clause shares the defined Restricted Period; an investment restraint untethered from any competitive business interest is the hardest clause in the family to defend as reasonable.
Sources for this answer
Primary law · 1987-12-28
G.3 MCL § 445.774aMCL 445.774a supports the conditions on a permitted Michigan non-compete: a reasonable competitive business interest and reasonable duration, geography, and type of employment.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Case law · 2006-05-24
G.1 St. Clair Medical, P.C. v. BorgielBorgiel supports requiring the covenant to protect against an unfair competitive advantage rather than ordinary competition.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Case law · 2016-02-18
G.2 Mid Michigan Medical Billing Service, Inc. v. WilliamsPDFMid Michigan Billing supports the limit that an employer has no unlimited right to restrict the business choices of its clients, which cuts against open-ended non-dealing and competitor definitions.
Although plaintiff argues that the expansive restriction is necessary to protect its business interests, plaintiff does not have an unlimited right to restrict the business choices of its clients.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
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Non-disparagement
Standard to include with a stated term, but audit the carve-outs: truthful testimony, statements to government agencies, and protected workplace speech must sit outside the clause. Federal labor law polices overbroad versions in every state.
Sources for this answer
Agency guidance · 2023-02-21
H.1 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that severance terms broadly waiving Section 7 rights — including overbroad non-disparagement provisions — violate the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
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Physician-specific notices and carve-outs
The dedicated clause should state Michigan's position plainly: there is no categorical physician rule — physician covenants run through the ordinary reasonable-competitive-business-interest test, and the leading case upheld one. The distinctive Michigan issue is proof, not validity: the physician-patient privilege blocks discovery of nonparty patient information, so a medical employer's enforcement plan has to rest on non-privileged evidence of diversion.
Sources for this answer
Case law · 2006-05-24
I.1 St. Clair Medical, P.C. v. BorgielBorgiel supports that a physician non-compete can satisfy the ordinary MCL 445.774a reasonable-competitive-business-interest test.
We conclude that the covenant protected plaintiff from unfair competition by defendant and therefore protected a reasonable competitive business interest as required by MCL 445.774a(1).
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Case law · 2011-04-07
I.2 Isidore Steiner, DPM, PC v. BonanniSteiner supports the proof hurdle: Michigan's physician-patient privilege blocks discovery of nonparty patient information in covenant enforcement.
Because Michigan law is more protective of patients' privacy interests in the context of this litigation, Michigan law applies to plaintiff's attempted discovery of defendant's patient information.
See Isidore Steiner, DPM, PC v. Bonanni, 292 Mich. App. 265 (2011).
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No conflicting obligations
The worker's representation that no earlier agreement or order blocks the new role. It protects the employer against tortious-interference exposure from a prior employer and surfaces an inbound covenant before the first customer call instead of after it.
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Notice to future employers and other third parties
A genuine drafting choice. Notice provisions can support enforcement, but a warning letter built on a covenant a court later narrows or declines to enforce creates its own tortious-interference sensitivity — if the clause appears, condition any disclosure on the covenant as it would actually be enforced.
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Tolling during breach
The agreement should say whether the clock pauses during a breach — but flag any extension mechanism as an open Michigan question. The statute's remedial text authorizes a court to limit an unreasonable covenant, not to expand one, and any extension must still clear the reasonableness test courts apply as a question of law; a clause converting a fixed restraint into an open-ended one as litigation drags is exactly the overbreadth the framework targets.
Sources for this answer
Primary law · 1987-12-28
L.1 MCL § 445.774aMCL 445.774a's remedial text authorizes limiting an unreasonable covenant, not extending one, which cuts against assuming automatic tolling.
To the extent any such agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.
See MCL § 445.774a(1).
Case law · 2007-10-26
L.2 Coates v. Bastian Brothers, Inc.Coates supports that any extension clause must still satisfy the reasonableness framework, which courts apply as a question of law on undisputed facts.
The reasonableness of a noncompetition provision is a question of law when the relevant facts are undisputed.
See Coates v. Bastian Bros., Inc., 276 Mich. App. 498 (2007).
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Remedies
Look for the acknowledgement that breach may cause irreparable harm and that an injunction is appropriate relief. The recital supports the element without deciding it — a Michigan court still measures the underlying covenant against the reasonableness framework before restraining anyone.
A commercial choice — the non-compete statute itself provides no fee award. Worth checking against the trade-secret overlay: Michigan's trade-secret act lets a court shift fees for bad-faith claims or willful and malicious misappropriation, relief that runs in both directions and that a contractual fee clause should not contradict.
Sources for this answer
Primary law · 1998-12-30
M.1 MCL § 445.1905MCL 445.1905 supports fee-shifting for bad-faith misappropriation claims or willful and malicious misappropriation, relief the non-compete statute does not provide.
If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney's fees to the prevailing party.
See MCL § 445.1905.
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Severability and reformation
Read the severability clause as housekeeping, not a strategy. Michigan's statute lets a court limit an unreasonable covenant and enforce it as limited, and the case law confirms the modification power — but the statute says a court may do this, never that it must, so an agreement drafted broad in reliance on judicial trimming is betting the covenant on a discretionary rescue. The defensible posture is scope, geography, and duration sized to the protectable interest from the outset.
Sources for this answer
Primary law · 1987-12-28
N.1 MCL § 445.774aMCL 445.774a supports the discretionary nature of judicial narrowing: a court may limit an unreasonable covenant and enforce it as limited.
To the extent any such agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.
See MCL § 445.774a(1).
Case law · 2016-02-18
N.2 Mid Michigan Medical Billing Service, Inc. v. WilliamsPDFMid Michigan Billing confirms the statutory power to modify an unreasonable covenant rather than void it, the power the drafting posture should not lean on.
If the terms of a noncompetition agreement are unreasonable, MCL 445.774a allows a court to modify the terms of the agreement to render it reasonable and enforceable in light of the circumstances in which it was made.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
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Survival
Per-covenant survival keeps each clock independently checkable — perpetual for trade secrets, finite elsewhere. A bundled survival clause is where an unexamined duration hides, and in Michigan every duration that survives is one the reasonableness test will eventually measure.
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Assignment and successors
Confirm employer-side assignability to successors and that the worker cannot assign. The assignee inherits the covenant as drafted: whoever ends up enforcing must still tie the restraint to a reasonable competitive business interest the successor actually holds.
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Governing law, venue, dispute process
Specify governing law, venue, and dispute process — and expect the forum clause to do real work in Michigan. The Sixth Circuit held a non-compete's Michigan forum-selection clause valid and enforceable under Michigan law, and Michigan courts apply Michigan law to decide a forum clause's effect even when the contract picks another state's law for the merits, so the two clauses should be drafted as a coherent pair rather than copied from different forms.
Sources for this answer
Case law · 2017-05-24
Q.1 Stryker Corp. v. Ridgeway (Stone Surgical, LLC v. Stryker Corp.)Stryker supports that a non-compete's Michigan forum-selection clause is valid and enforceable under Michigan law.
Under Michigan law, the Michigan forum-selection clause is valid and enforceable.
See Stryker Corp. v. Ridgeway, 858 F.3d 383 (6th Cir. 2017).
Case law · 2020-11-24
Q.2 Barshaw v. Allegheny Performance Plastics, LLCBarshaw supports that a Michigan court applies Michigan law to determine a forum-selection clause's effect, separate from the contract's choice-of-law provision.
Hence, in the absence of certain factors not germane to this appeal, a forum-selection clause may be considered separately from any choice-of-law provision that may also be in the contract, and in such cases, the Michigan court in which the action has been filed, shall apply Michigan law in determining the effect of the forum-selection clause.
See Barshaw v. Allegheny Performance Plastics, LLC, 334 Mich. App. 741 (2020).
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Entire agreement, amendment, waiver, e-signatures
Standard boilerplate, with one Michigan-flavored check: when the covenant rides inside a bundled onboarding packet, the Michigan Supreme Court has subjected terms in adhesion-style hiring agreements to reasonableness review. The merger clause should make clear exactly which signed document carries the covenant and what was exchanged for it.
Sources for this answer
Case law · 2025-07-31
R.1 Rayford v. American House Roseville I, LLCRayford supports reasonableness scrutiny of terms in adhesion-style onboarding agreements, which matters for packets bundling covenants with other paperwork.
A shortened limitations provision contained in such an agreement must be examined for reasonableness.
See Rayford v. American House Roseville I, LLC, ___ Mich. ___ (2025) (Docket No. 163989).
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Michigan statutory gates (MCL § 445.774a)
The five items below exist only on this Michigan page: they implement the statute's reasonable-competitive-business-interest requirement and its scope limits, the case-law boundaries on general knowledge and consideration, and the separate antitrust standard that governs covenants between businesses.
The covenant survives only if it protects a reasonable competitive business interest — which means protecting the employer against the worker gaining an unfair advantage in competition, not insulating the employer from competition itself. Identify the specific interest in the document: confidential information, customer relationships, or trade secrets. A covenant that recites competition alone fails the test even though the statute permits non-competes.
Measure all three statutory dimensions — duration, geographic area, and the type of employment or line of business restricted — against the interest claimed. There is no fixed numeric cap, but an open-ended restriction fails: the Court of Appeals found a restraint with unlimited duration and geography on serving past or current clients unreasonable, and reasonableness gets decided as a question of law when the facts are undisputed, so overbreadth can sink the covenant without a trial.
No covenant in the agreement may stop the worker from using general knowledge or skill — the reasonableness test builds that limit in, and the Michigan Supreme Court enforces confidentiality-based restraints only to the extent they reasonably protect actual confidential information. Read each covenant and the confidentiality definition together: language sweeping in the trade itself, rather than the employer's secrets and relationships, claims more than Michigan law will enforce.
For a covenant signed after employment began, establish what the worker received. Continued employment alone is sufficient consideration only in a genuine at-will setting; the Court of Appeals held a covenant void where just-cause employees got nothing else, because refusing to sign would not have been just cause to fire them. If the worker has just-cause protection or an employment contract, look for separate identifiable consideration — a raise, bonus, promotion, or new confidential access — documented in the agreement itself.
Classify the relationship before applying any other item on this page. A genuine commercial covenant between businesses — including a sale-of-business or transaction-ancillary restraint — is evaluated under the antitrust rule of reason, with deference to federal interpretations, not under the employee duration-geography framework. The antitrust baseline asks about market context and competitive effect, so a business-to-business covenant reviewed as if it were an employee clause has been analyzed under the wrong standard from the first step.
Sources for this answer
Primary law · 1987-12-28
S.1 MCL § 445.774aMCL 445.774a supports both gates: the covenant must protect a reasonable competitive business interest and be reasonable as to duration, geographical area, and type of employment or line of business.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Case law · 2006-05-24
S.2 St. Clair Medical, P.C. v. BorgielBorgiel supports the substance of the protectable-interest gate: protection against an unfair competitive advantage, not ordinary competition.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Case law · 2016-02-18
S.3 Mid Michigan Medical Billing Service, Inc. v. WilliamsPDFMid Michigan Billing supports finding an unlimited-duration, unlimited-geography client restriction unreasonable.
Although plaintiff argues that the expansive restriction is necessary to protect its business interests, plaintiff does not have an unlimited right to restrict the business choices of its clients.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
Case law · 2007-10-26
S.4 Coates v. Bastian Brothers, Inc.Coates supports that reasonableness is decided as a question of law when the relevant facts are undisputed, so overbreadth can be resolved without a trial.
The reasonableness of a noncompetition provision is a question of law when the relevant facts are undisputed.
See Coates v. Bastian Bros., Inc., 276 Mich. App. 498 (2007).
Case law · 2006-05-24
S.5 St. Clair Medical, P.C. v. BorgielBorgiel supports the prohibition on covenants that bar the worker's use of general knowledge or skill.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Case law · 1985-01-17
S.6 Follmer, Rudzewicz & Co., P.C. v. KoscoFollmer supports enforcing a covenant only to the extent it provides reasonable protection for the employer's confidential information.
To the extent such an agreement provides reasonable protection for the confidential information of the employer, it does not violate the statute and is enforceable.
See Follmer, Rudzewicz & Co., P.C. v. Kosco, 420 Mich. 394 (1984).
Case law · 2004-09-15
S.7 QIS, Inc. v. Industrial Quality Control, Inc.QIS states the rule that continued employment alone is sufficient consideration only in an at-will employment setting.
Mere continuation of employment is sufficient consideration to support a noncompete agreement in an at-will employment setting.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
Case law · 2004-09-15
S.8 QIS, Inc. v. Industrial Quality Control, Inc.QIS held the covenant void for just-cause employees because refusing to sign would not have been just cause for termination, so continued employment supplied no consideration.
Because defendants were “just cause” employees, however, the issue is whether defendants' refusal to sign the noncompete agreement would amount to “just cause” for their termination.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
Case law · 2016-07-14
S.9 Innovation Ventures, LLC v. Liquid Manufacturing, LLCInnovation Ventures supports evaluating commercial business-to-business non-competes under the antitrust rule of reason rather than the employee test.
Commercial noncompete agreements between businesses should be evaluated under the rule of reason, and federal court interpretations of the rule of reason should be given due deference.
See Innovation Ventures, LLC v. Liquid Mfg., LLC, 499 Mich. 491 (2016).
Primary law · 1985-03-29
S.10 MCL § 445.772MCL 445.772 supplies the antitrust baseline the rule-of-reason analysis runs on: a contract in restraint of trade in a relevant market is unlawful.
A contract, combination, or conspiracy between 2 or more persons in restraint of, or to monopolize, trade or commerce in a relevant market is unlawful.
See MCL § 445.772.
Primary law · 1985-03-29
S.11 MCL § 445.784MCL 445.784 supports the federal-deference instruction the rule-of-reason analysis follows.
It is the intent of the legislature that in construing all sections of this act, the courts shall give due deference to interpretations given by the federal courts to comparable antitrust statutes, including, without limitation, the doctrine of per se violations and the rule of reason.
See MCL § 445.784(2).