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Non-Competition Clauses

Employment non-compete agreement Attorney

If you sign a non-compete clause is an agreement between you as an employee and your employer. Generally employer requires not only new employee to sign a non compete agreement but also current employees too. Signing a noncompete agreement with your employer means that you are not allowed to compete with your employer’s business for a certain period of time after your employment relationship is concluded terminating with your employment. Additionally, these type of agreements may restrict who you can work for, the industry you can work in, and the location of your future jobs. All of this can make it very difficult to find a new job. It sound very harsh, however, non-compete agreements are not always received well by courts, which means you may not actually have to comply.

The Court uses a balancing test to find out if the restraint is reasonable.

Generally courts will construe the terms of those covenants strictly, against the employer. Only “reasonable” provisions will be enforced since covenants not to compete inhibit the freedom of trade. Therefore, it is important to carefully craft any covenant with the assistance of legal counsel so that it will withstand scrutiny of the courts.

Courts use certain tests to find out if the covenant is reasonable; it is a balancing test: 1) From the employer’s point of view: the restraint is reasonable and is not greater than is necessary to protect the your employer’s legitimate business interest, 2) From the employee’s point of view: the covenant is reasonable if it is not unduly harsh or oppressive to your legitimate efforts to earn a livelihood, and 3) From public policy point of view: the covenant is not against public policy.
Some of the factors the court look at such as the nature of the restraint, what is protected, the geographical area of the restraint and the time period of the restrains.

Ultimately, “reasonableness” is a balancing act between the three different kinds of restrictions that covenants not to compete offer: the duration of the restriction, the size of the geographic area where the restriction applies, and breadth of activity to be restricted. The broader any one of these restrictions is, the more narrow the others will need to be in order for the covenant to be reasonable, and all three will be assessed within the perspectives of the employer, the employee, and the general public.

In general, courts find reasonable those covenants that restrict an employee from engaging in the same kind of work he or she performed for the employer in the geographic area the employer does business for a period of two years after termination.

Your Employer Must Give You Something of Value

A non-compete agreement is a contract. Therefore, your employer must give you something of value in exchange for your promise not to work for a competitor. In some states; if signing the non-compete agreement is required as a precondition of the job offer, It could be considered that the offer of employment itself is sufficient value. Many other states require something more, such as an additional payment of money. If you sign the agreement while you’re already working, however, many courts don’t view your continued employment as having the same kind of value.

A Non-Compete Agreement Cannot Last Too Long

Your non-compete agreement cannot be valid for the rest of your career. It must be effective for a reasonable amount of time and it must include a date when you’re free to go work for a competitor. The amount of time considered “reasonable” depends on the state. Generally, non-compete agreements that last longer than two or three years can’t be enforced by a former employer.

Too-Broad Geographic Restrictions Can Void the Agreement

The main purpose of a non-compete agreement is to prevent you from competing with your employer. Therefore, geographic restrictions in the agreement must prevent you from working only in areas where your employer conducts business. Many states give you more protection than this. In these states, the agreement prevents you from working only in regions where you actually performed work for the employer. In these states, the agreement may prevent you from working in one county, but not in a neighboring county.

Courts Won’t Allow Forced Unemployment

Regardless of the terms of your non-compete agreement, courts don’t want you to be forced out of employment or out of your profession. If a non-compete agreement prevents you from using professional skills that you’ve developed over many years, courts will find this restriction overly broad and probably not enforce the non-compete agreement.