It is common for employees to sign a non-compete clause, but there is also a lot of confusion regarding these documents. A former employer, potential new employer and the employee who signed the agreement may have different interpretations of the document.
Non-compete agreements are designed to prevent former employees from going to the employer’s competitor or starting a new business that becomes a competitor. Depending upon the language, it could also apply to employees working in similar fields.
Three elements of a non-compete
These agreements will likely represent the specifics of the job and potential future jobs, but some general guidelines often include:
- Geography: The geographic boundaries will likely depend on how specific the job is – i.e., if there are a lot of people doing similar work, the geography may be more limited.
- Time: There may be an amount of time before the employee may return to similar work. An enforceable length is likely no longer than two years.
- Types of jobs: Depending on the specifics of the work, this could be managing a similar restaurant or pharmaceutical sales.
These cannot be overly restrictive
The courts will often consider a non-compete as an unfair restraint of trade if the agreements contain language that cites large geographic restrictions, an overly broad array of competitors or types of jobs. Those agreements that are reasonably specific or have a more limited period will have a better chance of being enforceable.
States have different laws regarding these agreements, and there may be other variables as well. It is also important to remember that non-competes are different from non-disclosure or trade secret agreements, which can prevent a former employee from using training or sensitive information attained on the job to advance a new endeavor.
Legal guidance can be helpful
Employees or former partners with questions about a non-compete they signed often find it helpful to consult with an attorney. If there is potential for a dispute, the attorney can examine the specifics of the agreement and the situation’s circumstances to determine if litigation will likely benefit the client.