In today’s ever-changing business landscape, there is growing pressure on employees to sign non-compete agreements. More and more businesses are enforcing these types of agreements, even for non-corporate jobs such as dog trainers or yoga instructors. If you are looking for a new job or your current employer is requiring you to sign a non-compete agreement, seeking the counsel of experienced contracts lawyers can ensure that your interests are protected.
What is a non-compete agreement?
Sometimes called a covenant not to compete, a non-compete agreement is a contract in which an employee agrees not to open a competing business or work for a competitor for a specific period of time in a defined area after his or her employment ends. There are different scenarios in which you may be asked to sign a non-compete agreement, including: before you start a new job, when you are offered a raise or promotion, and before getting severance pay if you quit or are fired.
There are a few important things to keep in mind before signing any non-compete agreement, and a skilled non-compete lawyer can help you determine whether or not the terms of the contract are in your best interest.
General non-compete agreements or covenants not to compete typically cover the following three aspects in the contract:
Standard non-compete agreements prohibit employees from working for competing businesses within a specific period of time in a demarcated geographical area.
Non-solicitation agreements prohibit employees from poaching customers, coworkers and/or vendors of the former employer.
Non-disclosure agreements (NDAs) forbid employees from using or sharing information that the former employer wants to keep confidential, and may include product design, advertising strategies, mailing lists and other proprietary information.
Is your non-compete agreement reasonable?
Although employers have a right to protect their businesses, non-compete agreements can go too far and impede your ability to make a living if you decide to leave the company. Courts will not honor provisions that they deem “unreasonable; and when it comes to negotiating a non-compete agreement, there are a few specifics that should be closely examined before you sign.
The Specified time period. Depending on the type of work you do, the time period in which you’re bound to honor the agreement can vary. Courts may consider six months for a dog trainer reasonable, but five years could be considered appropriate for a CEO.
The non-compete area. A 20-mile radius might be reasonable for a hairstylist, but if you’re a sales manager, the prohibited geographical area could cover a few states.
The impact on your livelihood. Make sure to consider whether or not the agreement will force you to relocate or impede your ability to make a living. Some courts weigh in on this, but there is no guarantee that a judge will rule in your favor.
It may be tempting to sign a non-compete agreement on the spot, but jumping the gun can have grave consequences down the road. Take the contract to experienced business lawyers for review. Our West Chester business attorneys at Carosella & Associates will make sure everything is in order and help to ensure that your interests are protected.