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I was currently released form a comany in a downsizing ...

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I was currently released form a comany in a downsizing effort due to slow sales. Upon being hired, I was asked to sign a non compete. My former employer was a janitorial supply house where I classifed as a lighting specialist an assisted sales associates on the sale of electrical light bulbs. I am considereing re-entering the electrical distribution industry where I would be selling a wider variety of electrical products including light bulbs. With my previous employer I never had account responsability and I am sure that in my new endeavor I will be contacting some of the same accounts that I supported previous associates on. I live in the state of Indiana and does the non compete I signed affect my situation?
Submitted: 8 years ago.
Category: Legal
Expert:  Lawgirl replied 8 years ago.

DearCustomer

Thank you for your question.

Covenants not to compete, between employers and employees, are not enforceable merely because they are signed by both parties. Non-compete agreements are generally disfavored by Indiana courts, but will be enforced if they are reasonable. Courts will consider whether the employer has a legitimate protectible business interest, the geographic and time limits of the agreement, and the types of activities sought to be prohibited.

Legitimate protectible interest. To be enforceable, an employer must show some reason why it would be unfair to allow the employee to compete with the former employer. Courts have upheld agreements to protect goodwill and secret or confidential information, such as customer lists, customer requirements, and customer contacts. However, courts will generally not enforce an agreement if the sole purpose is to prevent the employee from using his or her general skills acquired while performing the employee's job. The employer must show some adverse or irreparable injury.

Geographic and time limits. A covenant not to compete must generally be limited in terms of geography and/or customers. Consider a medical supply distributor that requires its salespeople to sign non-compete agreements. The agreement may be enforceable if it prohibits a salesperson from competing in his old territory and for his old customers. But the agreement would likely be unenforceable if it prohibited the employee from sales jobs in a new territory seeking new customers. Indiana Courts have enforced non-compete agreements for periods of one year and greater.

Types of activities. A covenant not to compete must not be wider than is necessary to protect some legitimate interest of the employer. For example, a covenant may be too broad if it prevents a salesperson from working for a competitor in the finance department. The covenant is more likely to be enforced if it is limited to the scope of the employee's current activities.

It sounds like the noncompete agreement that you signed was very broad. I doubt that it will be upheld to prevent you from selling electrical products on the off chance that your light bulb selling will compete with your previous employer. You may want to take the agreement to a local attorney to read and for a determination as to how and if you will be affected by it.

Please let me know if you have any other questions, or require clarification of this matter. Otherwise please hit "ACCEPT", so I may receive credit for my response. Tips and feedback are also appreciated.

Good Luck!

-KAT

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