Do firms accurately define their labor and product markets with post-employment restraints?
Information and knowledge-driven markets are also labor markets in the sense that these intangible qualities move with workers. Firms compete for these resources by offering higher compensation, but firms are also concerned by the exit of workers, and seek to restrict this talent from migrating to product-market competitors. The definition of geographic boundaries in post-employment covenants affords insights into the firm’s perceived labor-product market linkage. Table 5 illustrates how such boundaries are commonly articulated. As with duration of time or activity restraints, courts rule on the reasonableness of the geographic dimension by considering factors such as whether the firm’s view of its market is overly broad, the denial of employment opportunities to the former employee, and public policy aversion to restraint of free trade. These are significant economic issues, and interestingly, states have approached them from very different, sometimes opposing, perspectives. For examp
