If you've ever taken a new job, you may have been presented with a non-compete agreement along with all the other hiring paperwork. But what exactly are non-competes and when can they actually be enforced if you decide to leave your company?
What Are Non-Compete Agreements?
A non-compete agreement is a restrictive contract that employers sometimes require employees to sign. These agreements prohibit employees from taking certain actions—like working for a competitor or starting their own competing business—for a certain period of time after leaving the employer. The non-compete lays out restrictions around working in ways that could undermine or conflict with the employer's business interests down the road.
Some common restrictions found in non-compete agreements include:
- Industry: The non-compete could narrowly restrict an employee from jobs only within the same industry as their current employer. For example, an accountant may have a non-compete banning them only from accountant roles at another firm. However, some non-compete clauses are written more broadly to ban any general employment with another company in an entire industry sector for a set time period after leaving.
- Geographic Region: To limit an employee's mobility after leaving a company, some non-competes specify a geographic radius where the person cannot work at a job deemed to be competing during the restricted timeframe. This distance is often a specific mile radius around current office locations.
- Roles & Responsibilities: A non-compete agreement may also be very customized, limiting an employee not just based on industry or geography but explicitly spelling out they cannot take on certain roles with titles, job duties or other responsibilities that directly replicate their current position at a competitor in order to protect intellectual property and insider knowledge.
- Time Period: Nearly all non-compete contracts do set reasonable limits on the length of restrictions—with periods ranging typically between 6 months to 2 years being common. Some states also legally cap the maximum duration.
Can All Non-Competes Be Legally Enforced?
Simply because you signed a non-compete with your employer does not necessarily mean it is an enforceable agreement. There are limits set by state laws regarding what constitutes reasonable restrictions on employees. Factors like geographic range, length of the non-compete restrictions, and legitimate business interests requiring protection are considered in most states before enforcement.
When Can Non-Competes Typically Be Enforced?
In many states, non-competes are only considered reasonably enforceable against high level employees - usually executives and others with significant inside knowledge or relationships that could genuinely undermine an employer if directly transferred to a competitor right away. The restrictions must also be limited in duration and geographical region to protect legitimate business concerns.
Overly broad non-compete agreements face significant court scrutiny before they are enforced through legal intervention against ordinary employees. However, the complexities around enforceability make consulting an attorney critical if your former employer threatens legal action over a non-compete contract.
Understanding Your Rights is Essential
The implications of non-compete agreements expand much further than most employees realize when starting a job. Getting clarity upfront before signing any restrictive employment contract is key. Should you face a non-compete battle when quitting a job, experienced employment attorneys can provide indispensable and in-depth counsel on state law and court precedent around enforcing these agreements against employees like yourself. They are your best allies to avoid prolonged legal entanglements so you can confidently move
forward in your career.