The right answer to the above question will depend on where you reside in the United States. Non-compete agreements are governed by state law, not federal; and not all states support non-compete agreements. In states where the agreements are supported, the terms of enforceability also differ from state to state.
For instance, if you are fortunate enough to be employed in California, the answer is NO; your current employer cannot stop you from going to work for a competitor. Note that under California Business and Professions Code Section 16600, unless you were an owner of the business, any “non-compete clause” which forbids an employee’s who is fired or resigns from working for a competitor or starting a competing business is illegal and unenforceable.
Howbeit, if you work outside of California, the law can be quite different, as many states will allow an employer to enforce non-compete agreements, even for employees who lack specialized skills (like janitors and fast food workers).
Virginia does allow and enforce non-compete contracts but heavily favors the employee when there is a challenge. A non-compete is only enforceable in Texas if it is ancillary to another agreement, and seems to be reasonable.
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What is a Non Compete Agreement?
A non-compete agreement is a contract that prohibits an employee from working with a company considered to be a competitor for a certain length of time after their termination. It also stops an employee from leaving to start a company that will directly compete with their current company.
Also remember that most non-compete agreements will also specify, or only be enforceable, within a certain “reasonable” geographical area, so if you’re quitting and moving to a place far away from where your current company doesn’t do business, it shouldn’t matter if your new job is in the same field.
Non-Compete agreements are great for employers; they help protect intellectual property and retain — well, maybe lock-in — employees. But for workers, they can be a nightmare. Traditionally, non-competes were meant only for high-level execs with access to trade secrets.
But in recent years, as the workplace has become more mobile and workers have been changing jobs with greater frequency, the use of non-competes has broadened dramatically.
However, if you are looking for a new job, and you’ve signed a non-compete agreement, you may want to go through your agreement before applying for new positions. If you signed a non-compete agreement, you’re not alone.
An estimated 30 million workers signed non-compete agreements when they started their jobs, which is about 18 percent of the workforce. Another 37 percent of workers say they’ve worked under non-compete agreements at some point in their careers, according to a report from the U.S. Department of Treasury.
How to Challenge a Non-Compete Agreement
There are various ways you can challenge a non-compete agreement with a high potential for getting it waived or receiving an agreement that it will not be enforced by the employer. These ways include;
Indeed some employers request for overly broad limitations, intentionally or unintentionally. A good number of smaller companies may be using a contract found on the internet that does not fit their business.
An employee who signs such an agreement can challenge it on these grounds. The concept of unreasonable terms includes times when a company only does business in one state. That company cannot block you from working in the same industry or position in another state where it does not do business.
Another example of unreasonable terms is if the company functions in a specific niche of a market or industry. A non-compete agreement should not keep you out of an entire sector. In terms of insider knowledge and proprietary information, asking you to be restricted from employment for more than the rest of the fiscal year may not be reasonable.
Especially in the world of high-tech, trends and changes happen so rapidly that any special knowledge would be out of date within a month or so. Asking for you to stay out of the business for five years is not reasonable.
No Violation of Terms
You can also prove that your new job would not violate the specific terms of the non-compete contract. Start by getting a copy of your contract from your current or former employer. Moreover, you can obtain it from human resources. Read it carefully; the terms may not have the limits you assume.
Employer Breaches Employment Contract
Most states that support non-compete agreements do so on the basis that there is an equal agreement or contract by which the employer is bound. Notably, it is the employment contract.
If you can prove the employer did not keep by all of the terms of your employment contract, it is highly unlikely you can be forced to follow the non-compete agreement you signed with that employer.
You Were Tricked into Signing
Did the employer make verbal promises to get you to sign a non-compete agreement and then not keep to those promises? Maybe you were told the non-compete contract would only be enforced if you went to a specific employer but your former employer enforces it regardless of who you go to work for.
Have it in mind that the best thing to do under any circumstance where promises are made verbally is to find a way to get them to put into writing. One way of doing so is to email the employer and request clarification of the promise(s)!
Then save the email response as it could be used as evidence if you ever need to challenge your non-compete agreement based on those promises.
Show Termination Without Cause
Note that courts do not always rule consistently on this point, but if you are part of a mass layoff or have been terminated from employment and yet did nothing wrong, any non-compete agreement you signed may be considered null and void.
Unsigned Non-Compete Agreement
This would be easy to prove. If you do not remember signing a non-compete agreement, ask for a copy. Do not assume the employer is in possession of a valid contract.
If you can prove that your current or former employer engaged in or asked you to act illegally or dishonestly towards its customers, you can also challenge a non-compete agreement since the employer will not want it known that it is engaging in illegal business acts. However, it is imperative to be tactful instead of threatening when you bring it up.
Lack of a Legitimate Business Interest
Non-compete agreements are more or less meant to protect company trade secrets or proprietary information. If you did not have access or exposure to information of this sort in your position, you can make the case that the non-compete should not be enforced because there is no legitimate business interest to protect.
Finding a new job is exciting, but it can be more complicated when a non-compete agreement is in place. Talk with an attorney to make sure you understand the contract before applying for new opportunities. Make smart, informed decisions to keep your transition smooth. A lawyer can explain exactly what you can and can’t do under the contract and what the consequences are if you break the rules.
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