Weinberger Law

When is a non-compete not a non-compete? When it’s a non-compete

Some companies require you to sign a non-competition agreement before you begin work. Here’s a secret: Many of them sit on legally shaky ground.

There are several aspects of the standard non-compete agreement that actually make the agreement unenforceable.

The best advice

The first and best advice is to simply not sign a non-compete agreement if you can’t live with the terms. Even if the terms are unenforceable and you should later want to fight the agreement, it’s still better to get good legal advice before you sign and reach an amicable agreement with your employer before you start your first day on the job.

But if you should sign a non-compete agreement, and if you should leave the company, and if the company should have reason to exercise the agreement you signed, there is recourse.

Follow the letter of the entire agreement

The first level of recourse is to determine if the non-compete agreement is part of the employee contract. Then you can look at the other provisions of the contract including insurance, bonuses, paid vacation and so on. If your employer failed to meet one of the obligations of the contract, then you could argue that you are relieved of all the obligations of the contract.

If you are a low-level employee such as a secretary or custodian, the company has no need to enforce a non-compete agreement. The same holds true for parallel but dissimilar businesses: If you are an accountant at a bank, there’s no reason to prohibit you from being an accountant at a school.

The duration of many non-compete contracts is too long. Any period longer than two years is usually considered unreasonable.

If the information the non-compete agreement seeks to protect is also readily available in the public domain, then a judge is likely to throw the agreement out.

If a company is abandoning a product line or a geographical sales area, then it has no interest in prohibiting you from working in those areas and a non-compete agreement could be void.

Legitimate business interests include:

  • Trade secrets
  • Confidential business information
  • Relationships with current or prospective customers
  • Goodwill associated with the business
  • Specialized training

Also, any company that fights to maintain a non-compete agreement and loses will be on the hook for attorney and court costs.

Most courts use the lens of reasonableness when determining if a non-compete agreement is valid. If you can argue that there is no good reason for the non-compete to prohibit you from working for another employer, then the agreement could be nullified.

The best course of action is to not sign a non-compete agreement at all, or to get advice from a qualified, experienced attorney before you sign such an agreement.

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