Legal Landscape:
Protecting Your Business When an Employee Leaves: Purposes and Benefits of Non-Compete Agreements and Non-Solicitation Agreements

Zach Williams

MTNA Business Digest, Volume 2, Issue 3

April 2023

Non-compete agreements, also known as restrictive covenants, are a legal agreement between an employer and an employee that limits the employee’s ability to compete with the employer’s business after their employment ends. While these agreements are a common feature in many large companies, small businesses—such as music studios and independent music instructors—can also benefit from using them.

Why should music studios and teachers consider asking their employees to sign non-compete agreements?

• Protecting confidential information: Small businesses often have trade secrets, confidential information and intellectual property that are critical to their success. A non-compete agreement helps to protect this sensitive information from falling into the hands of competitors. For music instructors, a non-compete agreement can be an excellent tool to protect their business interests, such as their reputation, customer relationships, and unique teaching methods.
• Maintaining relationships with students: Small businesses often rely on a limited number of key customers for a significant portion of their revenue. A non-compete agreement helps to prevent an employee from taking those customers with them to a competing business after their employment ends. Keep in mind that a non-compete agreement is different from a non-solicitation agreement.
• Attracting and retaining top talent: Non-compete agreements can also serve as a valuable tool for attracting and retaining top talent. It demonstrates that the studio or instructor values their employees and is committed to protecting their interests.

However, it is important to note that non-compete agreements are legally binding contracts, and as such, they must be reasonable in scope and duration. They cannot be overly restrictive or they may be found to be unenforceable. Additionally, some states have passed legislation barring non-compete agreements.

When drafting a non-compete agreement, the employer should consider the following factors:

• Geographical scope: The geographical area in which the employee is restricted from competing with the business should be reasonable and relevant to the business's interests. Many states have either passed laws restricting the geographic scope of a non-compete agreement.
• Time frame: The duration of the non-compete agreement should be reasonable and not excessively long. Typically, a time frame of one to two years is considered reasonable.
• Job functions: The non-compete agreement should only apply to the specific job functions that the employee performed while working for the small business. For example, an agreement cannot prohibit a former employee from all employment with a different music studio or teacher. Instead, the non-compete agreement must be limited to the type of work the employee was performing. For example, if a piano teacher under a non-compete agreement leaves to take a job with another studio teaching guitar or doing administrative tasks, it is unlikely that a non-compete would be an effective legal tool against the former employee taking that position.
• Consideration: The employee must receive something of value in exchange for signing the non-compete agreement, such as continued employment or a severance package.

Additionally, it is recommended that music teachers consult with a legal professional before using non-compete agreements. A lawyer can help ensure that the agreements are legally sound and enforceable, and can provide guidance on how to draft the agreements in a manner that best protects the interests of your business.

Non-Solicitation Agreements versus Non-Compete Agreements

While sometimes used interchangeably, there is a significant distinction between non-compete agreements and non-solicitation agreements. While non-compete agreements and non-solicitation agreements are both types of restrictive covenants that are used to protect a business’s interests, non-compete agreements are agreements between an employer and an employee that prohibit the employee from working for a competitor or starting their own competing business for a specified period of time after the employment ends. As noted above, the purpose of these agreements is to protect the employer's confidential information, trade secrets, and customer relationships. On the other hand, non-solicitation agreements are agreements between an employer and an employee that prohibit the employee from soliciting or accepting business from the employer’s customers or clients for a specified period of time after the employment ends. The purpose of these agreements is to prevent an employee from taking advantage of the relationships they developed with the employer's customers or clients during their employment. Non-solicitation agreements are also typically much easier to enforce, and are treated much more favorably under the law.

Understanding the difference in these two types of agreements, there remains one hurdle: enforcing the agreement. Should a teacher or employee decide to leave and breach the agreement, the employer will have to determine the cost of enforcing the agreement. This includes the obvious costs and time required to go to court to enforce the agreement; but there are also other considerations. Will enforcing the agreement put off other teachers from coming to work for you? Will your reputation among peers or among potential students be affected? Ultimately, the decision of whether to enforce the agreement goes beyond the monetary cost, and every small business owner should seriously consider whether it is actually worth it to enforce the agreement.

Non-compete agreements can be a valuable tool for music studios and teachers to protect their confidential information, maintain relationships with students, and attract and retain top talent. For more information on non-compete agreements, read these two documents posted on MTNA’s website in the Members Only, Legal Documents section: General Observations Non-Compete Agreements and  

Zach Williams is an attorney based in Oklahoma City. His practice focuses on civil litigation. Zach also holds a MA degree in music from the University of Missouri-Kansas City Conservatory of Music.