A legitimate interest is a legal standard used by a court in a legal proceeding. The standard is used to determine whether a party has a specific stake in the legal issue that the court is hearing.
Courts usually use the legitimate interest standard to determine whether an enforcing party has a protectable and legitimate interest that allows them to create some type of restriction or perform a specific action.
In contract law, legitimate interest refers to:
- When the court will question the enforceability of a contract, and
- Whether a party trying to enforce the contract has a legitimate interest that would allow them to perform a specific action.
This standard will usually be applied if the right is one that is beneficial to society as a whole. For example, when employers make a covenant not to compete agreement with an employee which states that the employee is prohibited from working in the same type of work after termination, the courts will determine whether the employer has a legitimate interest in preventing the employee from finding work and whether that interest is permissible and fair.
Legitimate interest standard is also used in a constitutional factor when the government creates some type of law or restriction limiting the rights of citizens and this standard is used to determine whether the law created is rationally related to a legitimate government interest. A legitimate government interest usually applies when the government is trying to pass a law to protect the health, safety, and economy of it’s citizens.
The legitimate interest standard is used by the court in business related matters when employers require new employees to enter into a non-compete agreement which limits the employee from working in a competing business after the employer-employee relationship has ended. The legitimate business interest refers to the goodwill that has been developed by the employer and the employer uses a non-compete clause to protect its confidential information.
In order for an employer to be allowed to enforce this non-compete agreement, the employer has to prove that the agreement is created to protect a legitimate business interest such as trade secrets, uniqueness of the business, and other confidential information regarding the goodwill of the business.
The employer must simply create a covenant not to compete that addresses only the legitimate interests and no others. The employer has to prove that the agreement is created to protect a legitimate business interest such as trade secrets, uniqueness of the business, and other confidential information regarding the goodwill of the business. typically, non-compete agreements must be reasonable in duration and scope.
Before signing anything that may restrict your future employment access, it is wise to have an attorney review the document. An employment attorney can also help draft a covenant not to compete, or negotiate the terms of the agreement. Typically, a business lawyer may provide you with information to determine whether the employer has a legitimate interest in preventing the employee from working in a competing business.