Michigan Court Invalidates Broad Noncompete, Allows Narrower Claims to Proceed

Confidentiality and non-solicitation provisions remain enforceable, but factual disputes remain over client solicitation and protected customers.

Apr. 6, 2026 at 7:43pm

Got story updates? Submit your updates here. ›

A photorealistic studio still life featuring a stack of business documents, a pen, and a laptop computer arranged elegantly on a clean, white background, conceptually representing the abstract corporate strategy and legal disputes at the heart of this story.A minimalist studio still life captures the nuanced legal battle over an employee's right to mobility and an employer's need to protect its business interests.Southfield Today

A Michigan business court ruled that a noncompete clause with no time or geographic limits is unenforceable, but allowed confidentiality and non-solicitation claims to proceed. The employee left his job to join a former co-owner of the company, and the company sued, alleging the defendant breached his employment agreement. The judge found the noncompete section unenforceable but said questions of fact remained regarding which clients were protected and whether the defendant's actions violated the confidentiality and non-solicitation provisions.

Why it matters

The ruling shows that Michigan courts may enforce narrow protections for an employer's legitimate business interests, but they will not tolerate overly restrictive covenants that are unlimited in duration and geographic scope. This highlights the ongoing tension between an employer's desire to protect its business and an employee's right to mobility.

The details

Judge Curt A. Benson granted the defendant's motion in part, finding the noncompete section unenforceable, but denied the motions on the confidentiality and non-solicitation provisions, finding that questions of fact remained regarding which clients were protected and whether the defendant's actions violated those clauses. The judge noted that when the business partner bought his interest in the original firm, the closing documents waived any covenants not to compete between the two owners, allowing them to solicit each other's clients and employees.

  • In July 2023, the firm hired the defendant as an accountant and senior manager.
  • In November 2023, the plaintiff's business partner purchased the principal's ownership interest in the firm.
  • In December 2023, the defendant resigned from the original company to accept a position with the former co-owner's new firm.

The players

Pennell CPA, PLC

An accounting firm started by its principal and later owned equally by that individual and a business partner.

Defendant

An accountant and senior manager who left Pennell CPA to join a former co-owner's new firm.

Curt A. Benson

The judge who ruled on the case.

Tad T. Roumayah

A Southfield employment attorney who commented on the ruling.

Got photos? Submit your photos here. ›

What they’re saying

“Michigan employees cannot be trapped by overreaching restrictive covenants, and this opinion properly refuses to enforce a non-compete that was of unlimited duration and geographic scope.”

— Tad T. Roumayah, Southfield employment attorney

What’s next

The judge will determine which clients are protected under the confidentiality and non-solicitation clauses and whether the defendant's actions violated those provisions.

The takeaway

This case highlights the ongoing challenge for employers to balance protecting their legitimate business interests with respecting an employee's right to mobility. Michigan courts will not enforce overly broad noncompete agreements, but may uphold narrower confidentiality and non-solicitation provisions if the employer can demonstrate a clear business justification.