Enforceability Of Covenant Contract Between Employer And Employee

Question

EHR, Inc. is an electronic health records company that operates in New York, Connecticut, New Jersey, Missouri, and California, and EHR has a business plan that anticipates penetration into all major metropolitan areas in the United States.EHR hires Marcus Welby as its Chief Executive Officer. Welby is an experienced and successful CEO who is well known for growing successful companies, and he was formerly the President of the largest national electronic health records company. EHR enters into an executive employment agreement with Welby with the following restrictive covenant: During the term of Employee’s employment and for a period of five (5) years following the effective date of termination of employment, Employee shall not, directly or indirectly, be employed in any capacity by a company that distributes electronic health records programs in a territory described as the United States of America.

1.    Using the framework of analysis provided in this lesson, provide an analysis of enforceability of this covenant. Please provide a complete explanation of your analysis and support of your conclusion.
2.    If you believe that the covenant is unenforceable, what would you change to make it enforceable? If you believe that it is enforceable, what changes would make it unenforceable?

Summary

The question belongs to Law and it discusses about a scenario where an electronic health records company hires a new CEO with a covenant contract. The validity of the covenant has been discussed in the solution.

Total Word Count 130