§921. Restraint of business prohibited; restraint on forum prohibited; competing business;
contracts against engaging in; provisions for
A.(1) Every contract or agreement, or provision thereof, by which anyone is
restrained from exercising a lawful profession, trade, or business of any kind, except as
provided in this Section, shall be null and void. However, every contract or agreement, or
provision thereof, which meets the exceptions as provided in this Section, shall be
enforceable.
(2) The provisions of every employment contract or agreement, or provisions thereof,
by which any foreign or domestic employer or any other person or entity includes a choice
of forum clause or choice of law clause in an employee's contract of employment or
collective bargaining agreement, or attempts to enforce either a choice of forum clause or
choice of law clause in any civil or administrative action involving an employee, shall be null
and void except where the choice of forum clause or choice of law clause is expressly,
knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the
incident which is the subject of the civil or administrative action.
B. Any person, including a corporation and the individual shareholders of such
corporation, who sells the goodwill of a business may agree with the buyer that the seller or
other interested party in the transaction, will refrain from carrying on or engaging in a
business similar to the business being sold or from soliciting customers of the business being
sold within a specified parish or parishes, or municipality or municipalities, or parts thereof,
so long as the buyer, or any person deriving title to the goodwill from him, carries on a like
business therein, not to exceed a period of two years from the date of sale.
C. Any person, including a corporation and the individual shareholders of such
corporation, who is employed as an agent, servant, or employee may agree with his employer
to refrain from carrying on or engaging in a business similar to that of the employer and/or
from soliciting customers of the employer within a specified parish or parishes, municipality
or municipalities, or parts thereof, so long as the employer carries on a like business therein,
not to exceed a period of two years from termination of employment. An independent
contractor, whose work is performed pursuant to a written contract, may enter into an
agreement to refrain from carrying on or engaging in a business similar to the business of the
person with whom the independent contractor has contracted, on the same basis as if the
independent contractor were an employee, for a period not to exceed two years from the date
of the last work performed under the written contract.
D. For the purposes of Subsections B, C, E, F, J, K, and L of this Section, a person
who becomes employed by a competing business, regardless of whether or not that person
is an owner or equity interest holder of that competing business, may be deemed to be
carrying on or engaging in a business similar to that of the party having a contractual right
to prevent that person from competing.
E. Upon or in anticipation of a dissolution of the partnership, the partnership and the
individual partners, including a corporation and the individual shareholders if the corporation
is a partner, may agree that the partners shall refrain from carrying on or engaging in a
similar business within the same parish or parishes, or municipality or municipalities, or
within specified parts thereof, where the partnership business has been transacted, not to
exceed a period of two years from the date of dissolution.
F.(1) Parties to a franchise may agree that:
(a) The franchisor shall refrain from selling, distributing, or granting additional
franchises to sell or distribute, within defined geographic territory, those products or services
which are the subject of the franchise.
(b) The franchisee shall:
(i) During the term of the franchise, refrain from competing with the franchisor or
other franchisees of the franchisor or carrying on or engaging in any other business similar
to that which is the subject of the franchise.
(ii) For a period not to exceed two years following severance of the franchise
relationship, refrain from carrying on or engaging in any other business similar to that which
is the subject of the franchise and from competing with or soliciting the customers of the
franchisor or other franchisees of the franchisor.
(c) The employee if employed by a franchisor shall:
(i) During the term of his employment by the franchisor, refrain from competing with
his employer or any of the franchisees of his employer or carrying on or engaging in any
other business similar to that which is the subject of the franchise.
(ii) For a period not to exceed two years following severance of the employment
relationship between the franchisor and the employee, refrain from carrying on or engaging
in any other business similar to that which is the subject of the franchise between the
franchisor and its franchisees and from competing with or soliciting the customers of his
employer or the franchisees of his employer.
(2) Except as provided in Paragraph (3) of this Subsection, neither a franchisee who
is a party to a franchise agreement regulated under the Federal Trade Commission Franchise
Disclosure Rule, 16 CFR 436, nor an employee of the franchisee shall be deemed to be an
employee of the franchisor for any purpose. A voluntary agreement entered into between the
United States Department of Labor and an employer shall not be used by a state department
or agency as evidence or for any other purpose in an investigation or judicial or
administrative determination, including whether an employee of a franchisee is also
considered to be an employee of the franchisor.
(3) Pursuant to Chapter 10 and Chapter 11 of Title 23 of the Louisiana Revised
Statutes of 1950, an employee of a franchisee may be deemed to be an employee of the
franchisor only where the two entities share or co-determine those matters governing the
essential terms and conditions of employment and directly and immediately control matters
relating to the employment relationship such as hiring, firing, discipline, supervision, and
direction.
(4) As used in this Subsection:
(a) "Franchise" means any continuing commercial relationship created by any
arrangement or arrangements as defined in 16 CFR 436.1(h).
(b) "Franchisee" means any person who participates in a franchise relationship as a
franchisee, partner, shareholder with at least a ten percent interest in the franchisee, executive
officer of the franchisee, or a person to whom an interest in a franchise is sold, as defined in
16 CFR 436.1(h), provided that no person shall be included in this definition unless he has
signed an agreement expressly binding him to the provisions thereof.
(c) "Franchisor" means any person who participates in a franchise relationship as a
franchisor as defined in 16 CFR 436.1(k).
G.(1) An employee may at any time enter into an agreement with his employer that,
for a period not to exceed two years from the date of the termination of employment, he will
refrain from engaging in any work or activity to design, write, modify, or implement any
computer program that directly competes with any confidential computer program owned,
licensed, or marketed by the employer, and to which the employee had direct access during
the term of his employment or services.
(2) As used in this Subsection, "confidential" means that which:
(a) Is not generally known to and not readily ascertainable by other persons.
(b) Is the subject of reasonable efforts under the circumstances to maintain its
secrecy.
(3) As used in this Subsection, "computer program" means a plan, routine, or set of
statements or instructions, including any subset, subroutine, or portion of instructions,
regardless of format or medium, which are capable, when incorporated into a machine-readable medium, of causing a computer to perform a particular task or function or achieve
a particular result.
(4) As used in this Subsection, "employee" shall mean any individual, corporation,
partnership, or any other entity which contracts or agrees with an employer to perform,
provide, or furnish any services to, for, or on behalf of such employer.
H. Any agreement covered by Subsection B, C, E, F, G, J, K, or L of this Section
shall be considered an obligation not to do, and failure to perform may entitle the obligee to
recover damages for the loss sustained and the profit of which he has been deprived. In
addition, upon proof of the obligor's failure to perform, and without the necessity of proving
irreparable injury, a court of competent jurisdiction shall order injunctive relief enforcing the
terms of the agreement. Any agreement covered by Subsection J, K, or L of this Section
shall be null and void if it is determined that members of the agreement were engaged in ultra
vires acts. Nothing in Subsection J, K, or L of this Section shall prohibit the transfer, sale,
or purchase of stock or interest in publicly traded entities.
I.(1) There shall be no contract or agreement or provision entered into by an
automobile salesman and his employer restraining him from selling automobiles.
(2)(a) For the purposes of this Subsection, "automobile" means any new or used
motor-driven car, van, or truck required to be registered which is used, or is designed to be
used, for the transporting of passengers or goods for public, private, commercial, or for-hire
purposes.
(b) For the purposes of this Subsection, "salesman" means any person with a
salesman's license issued by the Louisiana Motor Vehicle Commission or the Used Motor
Vehicle and Parts Commission, other than a person who owns a proprietary or equity interest
in a new or used car dealership in Louisiana.
J. A corporation and the individual shareholders of such corporation may agree that
such shareholders will refrain from carrying on or engaging in a business similar to that of
the corporation and from soliciting customers of the corporation within a specified parish or
parishes, municipality or municipalities, or parts thereof, for as long as the corporation
carries on a similar business therein, not to exceed a period of two years from the date such
shareholder ceases to be a shareholder of the corporation. A violation of this Subsection
shall be enforceable in accordance with Subsection H of this Section.
K. A partnership and the individual partners of such partnership may agree that such
partners will refrain from carrying on or engaging in a business similar to that of the
partnership and from soliciting customers of the partnership within a specified parish or
parishes, municipality or municipalities, or parts thereof, for as long as the partnership carries
on a similar business therein, not to exceed a period of two years from the date such partner
ceases to be a partner. A violation of this Subsection shall be enforceable in accordance with
Subsection H of this Section.
L. A limited liability company and the individual members of such limited liability
company may agree that such members will refrain from carrying on or engaging in a
business similar to that of the limited liability company and from soliciting customers of the
limited liability company within a specified parish or parishes, municipality or
municipalities, or parts thereof, for as long as the limited liability company carries on a
similar business therein, not to exceed a period of two years from the date such member
ceases to be a member. A violation of this Subsection shall be enforceable in accordance
with Subsection H of this Section.
M.(1) Any provision in a contract or agreement which restrains a primary care
physician from practicing medicine shall not exceed three years from the effective date of
the initial contract or agreement. Any subsequent contract or agreement between the
employer and primary care physician executed after the initial three-year term shall not
include noncompete provisions.
(2) If the contract or agreement provided for in Paragraph (1) of this Subsection is
terminated by the primary care physician prior to the initial three-year term, the primary care
physician may be prohibited from carrying on or engaging in a business similar to that of the
employer in the parish in which the primary care physician's principal practice is located and
no more than two contiguous parishes in which the employer carries on a like business. The
parishes shall be specified in the contract or agreement. The prohibition authorized in this
Paragraph shall not exceed a period of more than two years from termination of employment.
(3) For purposes of this Subsection, "primary care physician" means a physician who
predominantly practices general family medicine, general internal medicine, general
pediatrics, general obstetrics, or general gynecology. For any other physician, the provisions
of Subsection N of this Section shall apply.
N.(1) For any physician other than a primary care physician as defined in Subsection
M of this Section, any provision in a contract or agreement which restrains the physician
from practicing medicine shall not exceed five years from the effective date of the initial
contract or agreement. Any subsequent contract or agreement executed between the employer
and the physician after the initial five-year term shall not include noncompete provisions.
(2) If the contract or agreement provided for in Paragraph (1) of this Subsection is
terminated by the physician prior to the initial five-year term, the physician may be
prohibited from carrying on or engaging in a business similar to that of the employer in the
parish in which the physician's principal practice is located and no more than two contiguous
parishes in which the employer carries on a like business. The parishes shall be specified in
the contract or agreement. The prohibition authorized in this Paragraph shall not exceed a
period of more than two years from termination of employment.
O.(1) The provisions of Subsections M and N of this Section shall not apply to the
following physicians:
(a) Any physician who is employed by or under contract with a rural hospital as
provided for in the Rural Hospital Preservation Act, R.S. 40:1189.1 et seq.
(b) Any physician who is employed by or under contract with a federally qualified
healthcare center as defined in R.S. 40:1183.3 and which operates in a rural parish as
designated by the federal Office of Management and Budget at the time that the physician
is hired.
(2) For any physician exempted in this Subsection, the provisions of Subsection C,
J, K, or L of this Section shall apply.