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Wyoming Non-Compete Agreement | Laws & Enforceability

Updated on April 16th, 2023

A Wyoming non-compete agreement is a contractual clause that limits a person’s ability to engage in competitive activity with a business. As contracts in restraint of trade, non-compete agreements are generally disfavored by Wyoming courts—especially those restricting an employee’s freedom to continue in their profession. But subject to certain requirements, non-compete agreements that are necessary to protect a business from unfair competition may be enforceable.

Table of Contents

Are Non-Competes Enforceable in Wyoming?

Non-compete agreements can be enforceable provided that:

  1. The agreement is in writing
  2. The agreement is part of a broader transaction or relationship
  3. The agreement is supported by consideration
  4. The agreement is reasonable as to time and geographic limitations
  5. The agreement does not contravene public policy
(Preston v. Marathon Oil Co. (2012))
Any contract that places in jeopardy an employee’s ability to seek gainful employment or go into business is viewed with skepticism and likely to be invalid unless reasonably necessary to protect the legitimate interests of the employer. (Skaf v. Wyoming Cardiopulmonary Servs., P.C. (2021))

 

Reasonableness

A non-compete agreement must be reasonable in view of the complete circumstances surrounding the relationship or transaction, including:

  • The specific protection needed for the enforcing party
  • The level of hardship imposed on the restrained party
  • The countervailing public interests in freedom of trade

In non-compete covenants connected with employment relationships, courts will look at additional factors to determine the burden enforcement would place on the employee. These may include:

  • Inequality of bargaining power between the parties
  • Whether the employer acted in good faith
  • The family, life background, health, and other needs of the employee
  • The nature of the employee’s position
  • The employee’s career prospects

Brown v. Best Home Health & Hospice, LLC (2021)

Legitimate Interests

Businesses are not allowed to create contractual clauses for protection against “ordinary competition.” (Hassler v. Circle C Res. (2022)). Non-compete agreements can only be used to narrowly protect the legitimate interests of a business, in compliance with reasonableness standards and other requirements:

Attorneys (prohibited)

Lawyers cannot enter contracts restricting their right to practice, unless the provision is part of a contract for the sale of a law firm or a retirement benefits agreement. (Wyoming Rules of Professional Conduct 5.6)

 

Terminating an Employee

A covenant not to compete remains enforceable against an at-will employee who is fired unless the employer terminates the employment in bad faith. (Hopper v. All Pet Animal Clinic (1993), overruled on other grounds by Hassler v. Circle C Res. (2022)).

Burden of Proof

In a dispute or action to enforce a non-compete agreement, the party seeking enforcement must prove that the agreement is fair, necessary, and reasonable. (Tench v. Weaver (1962))

Continued Employment (consideration)

Additional consideration beyond the continuation of employment is not required to uphold a non-compete agreement. (Preston v. Marathon Oil Co. (2012))

Maximum Term

There is no statutory or judicial rule concerning term limits in non-compete agreements. The duration of the agreement must be reasonable given the circumstances and necessary for the protection of the business. In Ridley v. Krout, a seven-year covenant was held unreasonable and unenforceable. Term limits from one to three years are more common.

Blue Penciling (prohibited)

If the terms of a non-compete are found to be unreasonable, Wyoming courts will no longer use the “blue pencil” rule to modify and partially enforce the agreement. (Hassler v. Circle C Res. (2022))