Employment (Non-Compete)

BE SMART-UNDERSTAND THE LAW

By Douglas J. Davis

One of the biggest questions asked today is "should I sign a non-compete"? This all depends on your job responsibilities and the nature of the position you hold. A non-compete is an agreement between you and your employer to generally refrain from working or interfering with the employers company should your employment be terminated. The terms of the agreement are generally broad and in favor of the employer. All agreements must be in writing. A written agreement may be entered into with an employee, agent, independent contractor, partner, joint venture, distributor, dealer, franchisee, licensee of trademark or service mark, or the seller of all or part of a business, corporation, partnership, or limited liability company. Additionally, written agreements can be used for the protection of trade secrets.

For example, if you are a scientist and a company wants you to work with their development team on a new and emerging product, a non-compete maybe appropriate. Even in such event you must be careful not to sign an agreement that is overly broad and restrictive or you may find yourself not working for a considerable amount of time with no income.

If you are a lower level employee with modest income you may not want to sign a non-compete or you maybe in for hard times. Let us say you are a secretary and the agreement forbids you to work as a secretary for two years. This would substantially impair your income ability. Most agreements provide that an employee can be terminated at any time, with or without cause. After two weeks at a job they inform you that you are terminated and because you signed a two year non-compete you can not work as a secretary.

Of course a court of law may or may not uphold the agreement. When seeking to enforce these covenants, the employer must prove to the court that the agreement is reasonably intended for the protection of a legitimate business interest of the company. Examples are trade secrets, valuable confidential business information, substantial relationships with specific existing or prospective customers, customer goodwill associated with an ongoing business, a specific geographic location, or a specific marketing or trade area, and extraordinary or specialized training.

Most non-compete agreements are written for the benefit of the employer, not the employee. Do not sign an agreement without first understanding what it says. Contact an attorney if you need help. Do not rely on the employers statement that if something were to happen to your job the company would not enforce the agreement. Company policies change regularly and if they would not enforce an agreement why would you be signing the agreement in the first place.

 

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