Non-Compete Agreements Proliferate in the Hair Salon Industry

So I'm getting my haircut today. Which got me thinking about writing this post. I've heard from reliable sources that hair salons and spas routinely ask their employees to sign non-compete agreements. While I've not actually seen one, I've heard that they typically seek to block to employee from working within so many miles from the establishment for about a year. They may actually be worse. I've even heard that some places have agreed amongst themselves to not hire away the other's stylist. Man, that's gotta suck. Imagine starting a new job and being "forced" to sign a contract agreeing not to work in your chosen field should you decide to leave (or have it decided for you). Sure, I can see the salon's point of view. They believe that their customers are their's. Not the stylist. And if the stylists go about trying to steal customers just before or immediately after they leave, then the salon has a legitimate beef. But what if the stylist simply wants to leave for a better opportunity? And that stylist leaves without soliciting the salon's customers. Shouldn't they be free to work where they want? Depending upon the facts and the way the non-compete is written, maybe they can. That is, perhaps the non-compete is not enforceable. The problem for stylist is, who wants to spend money to go to trial and find out. And that's what the salons are hoping for. At least, that's what I surmise. On a sidenote, I think the proliferation of Salon Lofts throughout the city is great for the business minded stylist. Salon Lofts doesn't hire stylist. They rent out space to stylists. I heard it's on the order of $200-$400 per week. Which may seem like alot, but consider that the stylist don't have to find their own space, equipment and employees. Also, if they're pretty booked throughout the day, and can command fees comparable to the high end shops, then they're making some pretty decent cash. Off sidenote now, here's what the Ohio Supreme Court has to say about non-compete agreements:
We hold that a covenant not to compete which imposes unreasonable restrictions upon an employee will be enforced to the extent necessary to protect the employer's legitimate interests. A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if it is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public. Courts are empowered to modify or amend employment agreements to achieve such results. Raimonde v. VanVlerah (1975), 42 Ohio St.2d 21, 325 N.E.2d 544.
With respect to whether a non-compete is reasonable, the court in Busch v. Premier Integrated Med. Assocs., Ltd. (PDF) (September 5, 2003), 2003 Ohio App. LEXIS 4255, 2003 Ohio 4709, stated the following:
We have held that factors to be considered in determining reasonableness of the restrictions a covenant imposes include[:] (1) the existence of time and geographic limitations; (2) whether the employee represents the sole contact with the customer; (3) whether the employee possesses confidential information or trade secrets; (4) whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition; (5) whether the covenant seeks to stifle the inherent skill and experience of the employee; (6) whether the benefit to the employer is disproportional to the detriment to the employee; (7) whether the covenant operates as a bar to the employee's sole means of support; (8) whether the employee's talent which the employer seeks to restrict was actually developed during the period of employment; and (9) whether the forbidden employment is merely incidental to the main employment.
DISCLAIMER: The above does not constitute legal advise. If you need legal advice, please consult an attorney.
  • Andy

    Great article on non compete agreements. I've covered some of the case law myself at my article on non compete agreements.

    Download a sample non compete agreement at this link as well.

    Here's an overly broad non competition sample:

    Employee shall not, during the period of this Agreement and for a period of 3 years following the termination of Employee’s employment with the Company (the “Non?Competition Period”), directly or indirectly, either for the benefit of himself or for the benefit of any other person, firm, corporation, governmental or private entity, without the prior written consent of the Company, which consent may be withheld by the Company, in its sole discretion, compete with the Company in the Business in any manner or capacity through any form of ownership or as an advisor, principal, agent, consultant, partner, joint venturer, officer, director, stockholder, lender, executive, dealer, or member of any association engaged in the Business.

    Geographic Extent of Covenant. Due to the national scope of the Company’s business as an on-line and mail order retailer, Employee agrees that the obligations of Executive under apply to the entire United States and any other part of the world in which the Company conducts the Business. Employee hereby acknowledges that the geographic scope, scope of prohibited activities, and the time duration of the provisions of this Section are reasonable and are no broader than necessary to protect the legitimate business interests of Company, and Employee agrees and acknowledges that the Company conducts its business and provides services throughout the entire country. If the provisions of this Section are found to be unreasonable, then they may be amended by appropriate order of a court of competent jurisdiction to the extent deemed reasonable.

    Wow, three years and beyond a national geographic scope – pretty broad.

  • Andy

    Great article on non compete agreements. I've covered some of the case law myself at my article on non compete agreements.

    Download a sample non compete agreement at this link as well.

    Here's an overly broad non competition sample:

    Employee shall not, during the period of this Agreement and for a period of 3 years following the termination of Employee’s employment with the Company (the “Non?Competition Period”), directly or indirectly, either for the benefit of himself or for the benefit of any other person, firm, corporation, governmental or private entity, without the prior written consent of the Company, which consent may be withheld by the Company, in its sole discretion, compete with the Company in the Business in any manner or capacity through any form of ownership or as an advisor, principal, agent, consultant, partner, joint venturer, officer, director, stockholder, lender, executive, dealer, or member of any association engaged in the Business.

    Geographic Extent of Covenant. Due to the national scope of the Company’s business as an on-line and mail order retailer, Employee agrees that the obligations of Executive under apply to the entire United States and any other part of the world in which the Company conducts the Business. Employee hereby acknowledges that the geographic scope, scope of prohibited activities, and the time duration of the provisions of this Section are reasonable and are no broader than necessary to protect the legitimate business interests of Company, and Employee agrees and acknowledges that the Company conducts its business and provides services throughout the entire country. If the provisions of this Section are found to be unreasonable, then they may be amended by appropriate order of a court of competent jurisdiction to the extent deemed reasonable.

    Wow, three years and beyond a national geographic scope – pretty broad.

  • Andy

    Great article on non compete agreements. I’ve covered some of the case law myself at my article on non compete agreements.

    Download a sample non compete agreement at this link as well.

    Here’s an overly broad non competition sample:

    Employee shall not, during the period of this Agreement and for a period of 3 years following the termination of Employee’s employment with the Company (the “Non?Competition Period”), directly or indirectly, either for the benefit of himself or for the benefit of any other person, firm, corporation, governmental or private entity, without the prior written consent of the Company, which consent may be withheld by the Company, in its sole discretion, compete with the Company in the Business in any manner or capacity through any form of ownership or as an advisor, principal, agent, consultant, partner, joint venturer, officer, director, stockholder, lender, executive, dealer, or member of any association engaged in the Business.

    Geographic Extent of Covenant. Due to the national scope of the Company’s business as an on-line and mail order retailer, Employee agrees that the obligations of Executive under apply to the entire United States and any other part of the world in which the Company conducts the Business. Employee hereby acknowledges that the geographic scope, scope of prohibited activities, and the time duration of the provisions of this Section are reasonable and are no broader than necessary to protect the legitimate business interests of Company, and Employee agrees and acknowledges that the Company conducts its business and provides services throughout the entire country. If the provisions of this Section are found to be unreasonable, then they may be amended by appropriate order of a court of competent jurisdiction to the extent deemed reasonable.

    Wow, three years and beyond a national geographic scope – pretty broad.

  • anonamous

    If a stylist leaves, laid off or a better opportunity, they should have personal record of their clients contact information. Having kept this information, the stylist should be able to contact their clients. The clients are coming for the stylist, who provides them the service they are happy with. The client is not likely coming for the store, they love their stylist and will follow.

  • Ashley

    I own a salon and will have a non compete clause for everyone to sign. I also worked at a salon which enforced my noncompete clause 5 mile radius for 1 year. My clients still followed without me even having to solicit them. If you are good your clients will come. If you are good your boss should keep you around before you open up your own shop like I did.

  • Lanwnguy1394

    thanks for the information
    my 20 year old daughter is being sued for $100,000
    on a non compete from a 10 dollar an hour stylist job

  • Ella King

    These non competes are awful and give the employer way too much control for abusive situtations.  What can we do as a whole to make them illegal?

  • Cyan

    Although client retention is important, in my case I neglected to add a non compete in my contract to independent contractors, and they opened a salon 3 doors  away from me in the same mall……lesson learned.