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Employee Restrictive Covenant Agreement

Cover Terms

The terms below are incorporated into and form part of this agreement.

Employer[Legal name of the entity that employs the employee]
Employee[Full legal name of the employee]
Employee Title / Position
Effective Date[Effective date of this agreement — the date the last party signs. It anchors the duration presumptions stated in Cover Terms.]
Governing LawMichigan
Confidentiality
Trade Secrets DurationPerpetual
Other Confidential Information Duration24 months
Employee Non-Solicitation
Duration24 months
Market benchmark (based on 76 companies)HideShow
TermFrequency
12 months44.7%
Selected default24 months34.9%
18 months11.2%
Why this selected default?

Why is this the selected default?

24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative. The Act sets no express duration presumption for the no-hire category, so the uniquely-essential scope limit does the primary category work; counsel should size the term to the workforce interest actually protected.

Customer Non-Solicitation
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits well inside the presumptively reasonable window for a current-customer non-solicit: eighteen months, or for as long as post-separation consideration is paid, whichever is greater. Counsel may extend toward eighteen months, or longer while post-separation consideration is paid, where the interest supports it.

Consideration for Restrictive CovenantsEmployee's continued at-will employment, together with the compensation and the access to Confidential Information that Employer provides Employee under this agreement, which the parties agree are given in exchange for the restrictive covenants
State-law basis Employee's continued at-will employment, together with the compensation and the access to Confidential Information that Employer provides Employee under this agreement, which the parties agree are given in exchange for the restrictive covenants

Reference only — not part of this agreement.

The default recites continued at-will employment plus the compensation and confidential-information access the agreement itself provides. Continued employment is sufficient only where the worker is genuinely at will; counsel should replace it with a specific negotiated benefit (a raise, bonus, promotion, or new confidential access) whenever the worker has just-cause protection or an employment contract.

No Business with Covered Customers
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

12 months sits within the current-customer window. Because non-dealing has no category of its own, it is drawn to fit inside the current-customer non-solicit exception, and its duration tracks that category's presumption.

Non-Investment
Duration12 months
Non-Disparagement
Duration24 months

Standard Terms

1. Defined Terms

“Competitive Business” means the business activities described in Cover Terms under Competitive Business.

“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee and excluding the general knowledge, skill, and experience Employee acquired during employment.

“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.

“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.

“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.

“Protected Interests” means Employer's Confidential Information, Trade Secrets, and relationships and goodwill with its customers, patients, referral sources, and business partners.

“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.

“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.

“Trade Secrets” means information that derives independent economic value from not being generally known or readily ascertainable and that Employer takes reasonable measures to keep secret.

2. Recitals and Reasonable Competitive Business Interests

Employer and Employee acknowledge that each restrictive covenant in this agreement protects one or more of Employer's Protected Interests. Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement.

3. Timing, Consideration, and Employee Acknowledgements

The parties acknowledge that this agreement is supported by the consideration identified as Employee's continued at-will employment, together with the compensation and the access to Confidential Information that Employer provides Employee under this agreement, which the parties agree are given in exchange for the restrictive covenants. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement. This agreement is effective as of the Effective Date listed in Cover Terms.

Drafting Note Consideration

Continued employment alone is sufficient consideration for a Michigan covenant only where the worker is genuinely at will. Where the worker is a just-cause or contract employee, a covenant supported by nothing more than continued employment is void, because refusing to sign would not have been just cause for termination, so a covenant in that setting stands only on separate, identifiable consideration such as a signing or retention bonus, a raise, a promotion, or new confidential access .

4. Confidential Information and Trade Secret Protection

Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. This confidentiality obligation is intended to operate alongside, and independent of, any restrictive covenant, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.

Drafting Note Trade-secret protection as a covenant backstop

Confidentiality and trade-secret protection run independent of any covenant and outlast it: a trade-secret obligation holds for as long as the information keeps the secrecy that makes it a trade secret, and the Michigan Uniform Trade Secrets Act supplies remedies for misappropriation whether or not a non-compete survives . Return, deletion, and certification mechanics matter here because they are part of the reasonable secrecy efforts a trade secret requires, so a program that fails to reclaim confidential material can forfeit trade-secret status altogether. Fee exposure runs both ways: the non-compete statute carries no fee award, while the trade-secret act lets a court award fees to the prevailing party for a bad-faith misappropriation claim or willful and malicious misappropriation, so an aggressive or unfounded misappropriation theory carries its own downside .

5. Permitted Disclosures and Protected Conduct

Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.

6. Return, Deletion, and Certification of Company Property

Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.

7. Non-Solicitation of Employees

During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant reaches only Covered Employees during the Restricted Period and is drawn no broader than necessary to protect Employer's workforce stability and goodwill.

8. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners

During the Restricted Period, Employee must not Solicit the business of any Covered Customer.

9. No Business with Covered Customers

During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact.

10. Non-Investment

During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. Passive Public Holdings are permitted.

11. Non-Disparagement

During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including rights protected under Section 7 of the National Labor Relations Act.

12. Physician and Health Care Practitioner Covenants

If Employee is a physician or other licensed health care practitioner, each restriction applies only during the Restricted Period and within the Restricted Territory stated in Cover Terms.

Drafting Note The physician-covenant proof hurdle

Michigan applies no categorical physician rule: a physician covenant runs through the ordinary MCL 445.774a reasonable-competitive-business-interest test and can satisfy it . The distinctive Michigan problem is proof rather than validity — the physician-patient privilege can block discovery of nonparty patient information, so a covenant that reads well can still be hard to enforce where the employer's diversion case depends on patient records it cannot reach . A radius and term sized to the interest protected, and an enforcement theory resting on non-privileged evidence of diversion, are what carry a physician restraint in practice rather than only on paper.

13. No Conflicting Obligations

Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.

14. Notice to Future Employers and Other Third Parties

Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure.

15. Tolling During Breach

If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, up to a maximum extension equal to the original Restricted Period.

Drafting Note Tolling as a separate reasonable restraint

Whether a Michigan court will extend a covenant past its stated end date for a period of breach is unsettled, and the statutory text cuts against assuming it will: MCL 445.774a authorizes a court to limit an unreasonable covenant, not to expand one, and any extension is itself a restraint that must clear the same reasonableness test . An extension-on-breach clause written as an open-ended toll that lengthens as litigation drags on invites the very unreasonableness the statute targets, while one bounded to the duration of the breach and tied to a legitimate interest stays inside the framework a court would apply as a question of law when the facts are undisputed.

16. Remedies

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law, including relief under the Michigan Uniform Trade Secrets Act for actual or threatened misappropriation of a trade secret.

17. Enforceability and Severability

If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect.

18. Survival and Expiration of Each Covenant

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive for the Trade Secrets Duration specified in Cover Terms to the extent they relate to trade secrets, and for the Other Confidential Information Duration specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment.

19. Assignment and Successors

Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns. An assignee or successor takes each covenant subject to its existing limitations.

20. Governing Law, Venue, and Dispute Process

This agreement is governed by the law listed in Cover Terms. The parties agree to a Michigan forum for disputes arising out of or relating to this agreement. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.

21. Entire Agreement, Amendment, Waiver, and Electronic Signatures

This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.

Signatures

By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.

Employer

Employer: [Legal name of the entity that employs the employee]

Signature:

Signatory Name: [Full name of the authorized signatory signing for the employer]

Title: [Title of the authorized signatory signing for the employer]

Date:

Employee

Signature:

Print Name: [Full legal name of the employee]

Date:

Adapted from OpenAgreements Wyoming and Florida restrictive covenant templates. Licensed under CC BY 4.0.