Is a Non-Compete Agreement Worth the Paper It's Written On?

In the world of employment law, few topics arouse as much controversy and debate as non-compete agreements. Non-competes are ubiquitous in employment contracts, with even low-level employees sometimes being asked to sign contracts that limit what they can do after they leave the company. What may surprise many employers and employees is that many non-competes are almost completely unenforceable. Here's a brief look at who needs a non-compete agreement and when a non-compete clause has the best chance of being considered legally enforceable.

Protections vs. Restrictions

Employers often have a perfectly legitimate reason for asking their employees to sign non-compete clauses: they don't want their businesses to become victims of unfair competition. If a company spends time and money training a prospective employee, for example, and then, once that training is finished, that employee quits and gets a job across the street at a competing business, then the first business is likely to feel as though it's been taken advantage of. A non-compete clause can discourage this sort of behavior.

At the same time, however, non-competes restrict a former employee's ability to earn a living. A non-compete clause that makes it impossible for that former employee to find a new job in his or her industry is not only unfair to that employee, but is also likely going to be considered legally unenforceable.

Overly restrictive clauses

The biggest problem with many non-competes is that they are overly restrictive. Many employers worry that they need to create broad restrictions on their employees in order to ensure that their business is adequately protected. The irony, however, is that broad restrictions are more likely to be struck down by the courts, making those broad restrictions useless for protecting a business' interests. Non-competes need to be reasonable, meaning they can't make it nearly impossible for a former employee to find new work.

When it comes to determining whether a non-compete is overly restrictive, two main issues tend to be at stake: geography and time span. A non-compete that restricts employees from working for a competitor within a 20-mile radius, for example, has a much better chance of standing up in court than a non-compete that applies that same restriction to the entire state. Likewise, the time span during which the non-compete is in effect also has to be reasonable. A one-year restriction is usually considered reasonable, for example, while a 10-year restriction will almost always be declared unenforceable.

Non-compete agreements are often at the center of many business and employment disputes. If you're facing litigation related to a non-compete agreement, you need legal advice you can count on. Get in touch with the experienced attorneys at Weisberg Law today to find out how they can help you.

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