Strategies for Overcoming Employee Non-Compete Agreements: Part 1

Many employees have been faced with the decision of whether to sign a non-competition agreement when they start a new job. It has become pretty common for employers to require new employees to sign such agreement, which becomes effective at the end of the employment relationship. There are many different reasons employers want these agreements, such as protecting their trade secrets and their customer base. Nevertheless, courts express a general disapproval of non-compete agreements because they typically place very stringent restrictions on an individual’s right to earn a living. If you find yourself trapped by an unnecessarily restrictive non-compete agreement, here are several very useful strategies for fighting these agreements.

No. 1 – Was there consideration given for signing the non-compete agreement?

One reason many courts will not enforce a non-compete agreement is that there is no consideration given. In order for a non-compete agreement to be enforceable, the employee must be given something of value in exchange for giving up their future employment rights. This is a common problem when employers obtain a non-compete agreement from a current employee without giving that employee something in return. Typically, an employee signs a non-compete as a condition of employment, so the consideration is the new job.

If you were required to sign a non-compete agreement after you have already been hired, and you were not offered anything of value in exchange for signing that agreement, then the non-compete agreement is an unenforceable contract. On the other hand, if you are offered a raise, a promotion, or other employment benefits, in exchange for signing a non-compete, then the agreement may be enforceable. It is important to speak to a Birmingham employment attorney if you have concerns.

No. 2 – Is the restriction period unreasonably long?

Some non-compete agreements are unenforceable on their face because the restriction on future employment that is imposed is unreasonably long. Certainly, an agreement that prohibits an employee from ever taking a competing job, is unreasonably restrictive and will not be enforced. Non-compete agreements that impose restrictions on future employment for several years may not be unenforceable either. What a court will consider reasonable will depend on many factors, including the type of business involved and the specific circumstances. Generally speaking, the duration of a non-compete agreement should not exceed what is reasonably necessary to protect the employer’s legitimate business interests.

No. 3 – Is the geographic scope of the non-compete agreement unreasonable?

In addition to restricting future employment for a specified period of time, non-compete agreements usually restrict future employment within a specific geographic location or region. In most cases, the restrictions are based on a certain radius from the employer’s home office or facilities. The restriction may be stated as a list of cities, counties or states in which the employee is prohibited from working at a competing business. Clearly, the specific type of restriction will vary depending on the business, but it must be reasonable. Likewise, what will be considered reasonable will depend on the business, the industry, and other factors, so speak to a Birmingham employment attorney if you have questions or concerns.

If you feel you have been the victim of discrimination or retaliation in the workplace, or if you have any other questions regarding your employment rights, pleasecontact the experienced employment law attorneys at Wrady & Michel, LLC. You can contact us either online or by calling us at (205) 265-1880. We are here to serve you!

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