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Questions about Non Compete Agreement Laws

What is a non compete agreement?

A non compete agreement is where an employee enters into an agreement not to pursue a similar profession or trade as competition against the employer. The non compete agreement is also bound by the principle of consideration. This implies the non compete agreement may be in force after the termination of employment because the employee may work for a competitor, start his/her own business or take advantage of confidential or sensitive information from the former employer such as trade secrets, client lists, best practices, marketing strategies, and so on. Majority of the states in the U.S. except California, recognize and enforce non compete agreements. This type of agreement is common in the field of radio, television stations and with people who work for media companies.

I am under a non compete agreement which restricts me from working for the same client through another vendor. Since my employer is not paying salary on time, can I work for the same client through another vendor?

If salary is not be paid and the employer is guilty of defaulting on such payments, you can terminate your employment and be released from the non compete agreement as well. The employer does not have the right to default on salary as well as deny you from finding an alternate employment. If on the other hand the employer is delaying payments or you are unable to prove default of payment, the enforceability of the non compete is dependent on time and area. The court will consider the proprietary need of the employer to protect his/her business through the employee’s professional capability.

If this matter goes to court, non competes are usually expensive to enforce. Non compete agreements should be fair to both employer and employee, based on relevant public policy and narrow in its scope. Usually if the employee’s actions are extremely undesirable the court will uphold the non compete agreement. In this scenario, the chances of the employer spending money on a court case are slim and even if they do, the bias is usually towards the employee.

In what way is a non compete agreement effective?

A non compete agreement is governed by state and case laws. Due to case and state laws, non competes are time restricted as well as limited geographically. Each state may have different laws and interpretation of rules which concern non competes. Case laws also get altered when new or different cases are added or ruled upon. In order to assess the viability of your agreement, you would need to research on your particular state’s laws as well as recent developments in case decisions. This is a complicated task and is also dependent on the specific wording in your agreement. It would be useful for a local attorney to review your agreement and provide a professional viewpoint after a detailed review.

As an independent contractor I have been prohibited to contact clients and suppliers from my former company through a non compete agreement. Is this enforceable?

With a non compete agreement, the employer seeks to bind the employee from terminating the relationship to work for a competitor. The evaluation of enforceability of this agreement is dependent on the following factors:
  • Independent consideration- the employee is offered financial compensation or non monetary consideration such as training or promotion.
  • Geographic Limitation – the geographical limitation could be narrow or broad depending on the type of businesses, either local or international. The key is to check if the employer has justifiable business scope which merits protection.
  • Enforcement period – the non compete agreement is generally in force for two years or lesser after the employment relationship has ended. If it is longer than this period, it needs to be verified.

As a sales agent I have entered into a non compete agreement with my company. The company is into receivership thereby withholding the agent from conducting business. What are the legal consequences if I leave the company?

The sales representative is not obligated to honor the non compete agreement if the company is no longer in business. If the company is still operating at the time of receivership and you can make sales although not to your full capacity, the non compete agreement can be enforced against you. You will need to try and negotiate a release from the agreement and if that is unsuccessful, you can be sued for violation of the terms of the agreement making you liable to damages which could include attorney fees as well.

Non compete agreements are used as a common and useful tool to control the actions of the employee when it comes to safeguarding the interests and trade secrets of the company. In one way it maximizes the output of the employee towards the company goals but can also limit the scope of the employee’s professional career for a period of time. To know more about non compete agreements and have your questions answered, consulting Experts can help in providing the right and relevant information.

Ask a Lawyer

Tina
Tina, Lawyer
Category: General
Satisfied Customers: 8603
Experience:  JD, BBA Over 25 years legal and business experience.
4460311
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