contracts,

  • Non-Compete Agreements: What You Need to Know

     A non-compete agreement is used in a wide variety of industries and capacities including but not limited to: medical professionals, radio and television personalities, and most commonly those working at a sales capacity.

    A non-compete agreement can come in the form of a contract, or is sometimes added as a clause to another employment related document. Non-compete agreements are also known as an NCA (non-compete agreement), an NCC (non-compete clause) or and CNC (covenant not to compete).

    One Size Does not Fit All. Non-compete agreements can vary not only across industries and positions, but can also differ even amongst individuals working for the same company at the same capacity. Many companies do have a standard non-compete agreement for all of their employees, but others have very specific non-competes that can fluctuate significantly across a particular organization.

    Request a Copy After Signing if Possible. It’s extremely important for a candidate or new employee to request a copy of any non-compete agreement they are signing. While a copy of the non-compete can be requested from the human resources department of an organization at any point, it can save an uncomfortable situation to have your agreement on hand early on, especially if requesting it reveals that you are in the market for a new opportunity before you wanted to disclose this to an employer or are officially hired.

    Be Aware of the State Referenced for Jurisdiction.The laws that cover non-competes, and how a court will tolerate a non-compete, can differ significantly depending on the state that the jurisdiction of a non-compete applies to. The agreement or clause does not necessarily apply to the state an individual is doing business in, but can apply to the state of jurisdiction as suggested in the contract. For example, a company headquartered out of one state but doing business in many others can indicate the state they are headquartered in as the state of jurisdiction.

    Have your Agreement Examined by a Lawyer.Even if you don’t have a lawyer you regularly work with, there are many very inexpensive pre-paid legal type services available for a low monthly subscription without any long term commitment contracts that are utilized for document examination services such as the review of a non-compete. It’s also possible that the company an individual is considering transferring to will have a legal department that would be willing to review their non-compete, and in some cases even offer to support that person through litigation.

    A Non-Compete will Not Always Hold Up in Court. Some non-compete agreements are so general and all-encompassing that they can keep an individual from working elsewhere within a particular industry. However, the more restrictive a non-compete is, the less likely all of the factors are to hold up in court. In some instances, non-competes have not held up when they are considered too restrictive regarding the length of time or region specified.

    Know the Difference Between Right to Work VS. Non-Compete Laws. A state’s right to work status does not necessarily dictate how a non-compete would be interpreted by a judge. The ‘Right to Work’ is a state constitutional amendment that grants individuals the right to work without forced unionization,  allowing an individual to avoid paying mandatory union fees and choose whether or not they want to join a union at their own discretion. While it’s important to know whether your state is a ‘right to work’ state, this doesn't mean it will affect your NCC. The states that have right to work laws, are as follows: Alabama, Arizona, Arkansas, Kansas, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.

    Some states do not enforce non-compete agreements, while others enforce them but have exemptions for certain professions. It’s always a good idea to examine your agreement before changing jobs, as well as the relevant laws, and discuss the agreement or clause with your prospective employer.