Why “earning a livelihood” isn’t enough—the law should protect an employee’s right to pursue their greatest worth
In Part 1, we examined how courts claim to “balance” employer and employee interests when enforcing restrictive covenants. But that balance is a fiction. Courts still presume customer goodwill belongs to employers, then merely ask whether the restriction is too harsh in preventing the employee from “earning a livelihood.” This framework fundamentally misses the point. It fails to recognize that an employee’s talents (and effort and expertise and integrity) are themselves a source(s) of goodwill—and it sets the bar far too low for what employees deserve.
Two Competing Philosophies
Consider the language the courts have used. The South Carolina Supreme Court says it is “equally concerned with the right of a person to use his talents to earn a livelihood.” Sermons v. Caine & Estes Insurance Agency, Inc., 275 S.C. 506, 509, 273 S.E.2d 338, 339 (1980). Earn a livelihood. That phrase reveals much. It suggests the law’s job is merely to ensure the employee doesn’t starve—that he can make some living, somewhere, somehow. It sets a floor, not a ceiling. It protects subsistence, not success.
Now contrast that with a different vision—one articulated by the South Carolina Court of Appeals in Carolina Chemical Equipment Company v. Muckenfuss, 322 S.C. 289, 471 S.E.2d 721 (Ct. App. 1996):
“[T]he right of an individual to follow and pursue the particular occupation for which he is best trained is a most fundamental right. Our society is extremely mobile and our free economy is based competition. One who has worked in a particular field cannot be compelled to erase from his mind all of the general skills, knowledge, and expertise acquired through his experience. These skills are valuable to such employee in the market place for his services. Restraints cannot be lightly placed upon his right to compete in the area of his greatest worth.”
Not just survive. Not just get by. Not just “earn a livelihood.” But compete in the area of greatest worth—to pursue the occupation for which he is best trained, using the skills and expertise he has acquired.
These are two fundamentally different philosophies about economic freedom and human flourishing.
The Master-Servant Mindset
The “earn a livelihood” standard is a vestige of the Master-Servant relationship. It assumes the employee’s primary obligation is to the employer, and the law’s job is merely to prevent the most oppressive outcomes—to ensure the departing servant isn’t left completely destitute.
But this isn’t the nineteenth century. Employees aren’t servants. And in today’s economy—where individual talent, expertise, and relationships are the primary sources of value—the assumption that employers own all customer goodwill is not just outdated. It borders theft.
Think about what happens under the “livelihood” standard: A talented sales executive builds relationships with clients over years of extraordinary effort. She responds to emails at midnight. She learns each client’s business inside and out. She becomes their trusted advisor. When she leaves, the clients want to follow her—because she created value for them.
Under current law, the court asks: “Can she still earn a living in sales?” If the answer is yes—if she can go sell something else, somewhere else, to someone else—then the restriction is upheld. It doesn’t matter that she’s prevented from doing what she does best, with the clients who trust her most, in the industry where she’s built her reputation.
But it’s not enough. Not in a free society. Not in a market economy that’s “based on competition.” Not for people who want to “compete in the area of [their] greatest worth.”
Goodwill as a Function of Talent
Here’s what the “livelihood” standard completely misses:
The Muckenfuss court understood this. It recognized that skills, knowledge, and expertise are “valuable to such employee in the market place for his services.” But the Sermons court—though it acknowledged “the right of a person to use his talents”—failed to connect the dots. It didn’t recognize that if the employee’s talents created the goodwill, then the at least part of the goodwill belongs to the employee.
When a client chooses to work with a particular accountant, agent, or consultant, that choice reflects the professional’s skill, judgment, and trustworthiness. Those qualities don’t belong to the employer. They belong to the individual. Courts treat “talents” as something separate from “clientele and goodwill” but this deprives the employee of the fruits of his labor, talents, knowledge and integrity. They say the employer owns the goodwill, but the employee can use his talents elsewhere.
What “Greatest Worth” Requires
If we take seriously the principle from Muckenfuss—that individuals have a fundamental right to compete in the area of their greatest worth—the law must change in three ways:
First, shift the presumption. Instead of presuming all customer goodwill belongs to the employer, courts should presume goodwill belongs to the employee when the relationship is personal and built through individual skill and service. Let the employer carry the burden of proving they created the goodwill through substantial institutional investment.
Second, examine the source. Courts must ask where the goodwill actually came from. Did the employee bring pre-existing relationships? Did clients seek out the employee without solicitation? Was the relationship built through the employee’s extraordinary personal efforts that exceeded the employer’s investment? If yes to any of these, the goodwill belongs to the employee.
Third, apply the right standard. Stop asking whether the restriction allows the employee to “earn a livelihood.” Start asking whether it prevents the employee from competing in the area of their greatest worth. If a restriction forces a talented professional to abandon the clients they served, the industry they know, or the specialty they’ve mastered—if it forces them to start over and settle for less—then it fails the Muckenfuss test.
These would be steps toward more economic freedom and less judicial activism on behalf of corporations and businesses, which seek to protect itself from competition while closing off the goodwill from the people who help create it.
