Our law office is representing Carlton Hair Salon on the following legal matter. Marcia Willingham, our client, owns Carlton Hair Salon on Fenton Street in Silver Spring, MD. Sharon Watson, a former employee of Carlton, had been employed as a hairdresser from January 1, 2023, to March 31, 2023, when she resigned to pursue 'other interests'. When she went to work for the Carlton salon on January 1, 2023, Watson signed the Agreement Not-to-Compete that is attached.

 On Saturday, April 8, 2023, Helen Carter, a customer of Carlton, came into the salon to have her hair permed.  While Carter was having her hair permed, she had a casual conversation with Willingham.  Somehow, the conversation turned to Sharon Watson whereupon Carter mentioned that she had received a telephone call from Watson.  During Carter's conversation with Willingham, Carter mentioned that Watson said that she had opened her own hair and nail salon.  Carter told Willingham that Watson had said the location and suggested to Carter 'try us out'.  

  Willingham searched the web and found a webpage for Watson's Hair and Nails located on Market Street in Frederick, MD.  According to the website, Watson's salon offers hair cutting, hair perms, manicures and pedicures, a spa, and massages. Willingham is quite upset to think that Watson apparently started her own salon business as a competitor.  So, Willingham wants to know whether she can enforce the Agreement Not-to-Compete that Watson had entered into with the Carlton Hair Salon. Willingham provided our firm with a copy of the Agreement Not-to-Compete, which is attached. 

Another paralegal in our firm has performed the necessary legal research and advises that the law in Maryland is as follows:  Under Maryland common law, Covenants-Not-to-Compete are valid and enforceable when the geographical area restrained, the activity restrained, and the over

duration of the restraint are reasonable.  Budget Rent A Car of Wash., Inc., 268 Md. 478 (1973).  

[Note:  I 'adjusted' the case decisions in this assignment to fit the scenario.  This assignment is a legal writing assignment, not a legal research assignment.  Thus, legal research is neither necessary nor permitted.  You are welcome to look up the cases after you have completed this assignment; but, you may not do so beforehand.]

The paralegal's research also found the following: "A non-compete agreement that imposes an undue hardship on the employee is unenforceable."  Budget Rent A Car of Wash., Inc., 268 Md. 478 (1973). And "[a] three-year limitation prohibiting competition is reasonable while a five-year prohibition is not."  Holloway v. Faw, Casson, and Co., 78 Md. App. 205 (Md. Ct. Spec. App. 1989).

Following is a sample legal paragraph dealing with the issue of reasonableness with respect to the duration of a restraint.

 Carlton cannot enforce the duration provision of the Agreement Not-to-Compete between Carlton and Watson because the restraining period - twenty-five years after termination of employment - is unreasonably long.  In Maryland, an Agreement Not-to-Compete is not enforceable when the duration of the restraint extends for an unreasonably long time.  See Budget Rent A Car of Wash., Inc., 268 Md. 478 (1973).  This means that the duration clause of a Covenant-Not-to-Compete can be enforced only when the duration of the restraint is for a reasonable length of time. See Budget Rent A Car of Wash., 268 Md. 478. In the Watson-Carlton Agreement, the duration clause would restrain Watson from performing hair-care activities for twenty-five years after termination of her employment with Carlton - in other words through the year 2048.  Given that twenty-five years could be tantamount to the length of Watson's entire career, the agreement would have the effect of precluding Watson from earning her living by using the hair-care skills that she possesses.  Therefore, any agreement that would prevent Watson from doing hair-care work for twenty-five years after terminating her employment with Carlton is unreasonable and this provision of the Agreement Not-to-Compete is unenforceable.

"A non-compete agreement that extends to the geographical area of the entire State of Maryland or within a radius of 100 miles is overly broad."  Electronic Security Services, Inc. v. Higgs, Case No. 04-C-15-304 (Calvert County Cir. Ct. 2015).   [Same note as above.]

Your analysis should include a determination as to whether the following is relevant: You may want to consider using the following case.  "A non-compete agreement that restricts a former employee from obtaining employment in any role related to the subject matter of the agreement is overbroad and unenforceable."  Electronic Security Services, Inc. v. Higgs, Case No. 04-C-15-304 (Calvert County Cir. Ct. 2015).   Emphasis in the original.  

Agreement Not to Compete

 This is an Agreement ("Agreement") between Sharon Watson ("Watson" or 'You') and Carlton Hair Salon ("Carlton" or 'We' or 'Us').  The Agreement is effective beginning Monday, January 1, 2023.

 Carlton provides services associated with hair care including, but not limited to shampooing, cutting, trimming, curling, straightening, coloring, tinting, and any and all hair-care related services.  You, during your employment with Us will provide these services to individual customers, as requested by them.

 In consideration of the employment opportunity provided by Carlton, You, intending to be legally bound, agree to the following:

 Term of Agreement.  This Agreement is effective on the Effective Date (above) and shall remain in effect throughout the term of your employment with Carlton and for twenty-five years thereafter.

1. Limitations of this Agreement.  This Agreement is not a contract of employment. Neither You nor We are obligated to any specific term of employment.  This Agreement is limited to the subject matter of the agreement-not-to-compete as described below in this Agreement.
2. Covenant Not to Compete.  You agree that at no time during the term of your employment with Carlton will You engage in any business activity other than for Carlton that is competitive with Us for the types of hair-care services listed above, nor work for any company or other employer in any role related to the activities covered by this Agreement.

Following the termination of your employment, whether by your own volition or by Carlton, You will not, for yourself or on behalf of any other person or business enterprise, engage in any business activity in any role related to the activities covered by this Agreement anywhere in Maryland, Delaware, Virginia, or the District of Columbia.

1. Non-solicitation. During the term of this Agreement, You agree not to solicit any employee or independent contractor of Carlton on behalf of any other business enterprise, nor shall You induce any employee or independent contractor associated with Carlton to terminate or breach an employment, contractual or other relationship he or she may have with Carlton.
2. Soliciting Customers.  During the term of this Agreement, You shall not, directly or indirectly, disclose to any person, firm or corporation the names or addresses of any of the customers or clients of Carlton or any other information pertaining to them.   Neither shall You call on, solicit, take away, or attempt to take away any customer of Carlton with whom You became acquainted during the term of your employment, as the direct or indirect result of your employment with Us.
3. Injunctive Relief.  You hereby acknowledge that (1) Carlton will suffer irreparable harm if You breach your obligations under this Agreement; and (2) monetary damages will be inadequate to compensate Us for such a breach.  Therefore, if You breach any of the provisions of this Agreement, then We will be entitled to injunctive relief, in addition to any other remedies, at law or equity, to enforce such provisions.
4. Severable Provisions.  The provisions of this Agreement are severable, and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provisions to the extent enforceable shall nevertheless be binding and enforceable.
5. Modifications.  This Agreement may be modified only by writing executed by both You and Us.
6. Prior Understandings.  This Agreement contains the entire agreement between the parties with respect to the subject matter of this Agreement.   The Agreement supersedes all prior understandings, agreements, or representations.
7. Waiver.  Any waiver of a default under this Agreement must be made in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement.  No delay or omission in the exercise of any right or remedy shall impair such right or remedy or be construed as a waiver.  A consent to or approval of any act shall not be deemed to waive or render unnecessary consent to or approval of any other or subsequent act.
8. Jurisdiction and Venue.  This Agreement is to be construed pursuant to the laws of the State of Maryland.  You agree to submit to the jurisdiction and venue of any court of competent jurisdiction in Montgomery County, MD, without regard to conflict of laws provisions, for any claim arising out of this Agreement.

Answer rating: 100% (QA)

Based on the provided information the issue at hand is whether Carlton Hair Salon can enforce the Agreement NottoCompete that Sharon Watson had entere... View the full answer