Non-compete agreements are an issue that employers and employees have many questions about. From what they can include to whether they’re enforceable, there are a lot of nuances around these types of agreements.
Here are some things we look for when a client comes to us about a non-compete agreement.
What does the agreement say?
Typically, a non-compete agreement will specify a set amount of time that an employee is not allowed to compete against their employer after they leave their job. It will state the types of activities the former employee is prohibited from engaging in, and in most cases, it will set out the geographic area where they are not allowed to compete.
When a former employee consults with one of our employment lawyers, we will determine the scope of their non-compete agreement and whether it applies to what they wish to do.
Is the agreement enforceable?
In most cases, non-compete agreements are not enforceable for the average employee. They are generally too broadly drafted and put far too many restrictions on the types of activities that former employees may participate in.
However, it is much more likely that a non-compete agreement can be enforceable when applied to more senior employees.
Could a non-solicitation clause be sufficient to protect the employer?
Often, when non-compete clauses are challenged in court, the court will look at whether the employment contract also has a non-solicitation clause and whether this clause is sufficient to protect the employer. (If it is, the non-compete clause will usually be unenforceable).
A non-solicitation clause is a clause that prevents the employee from contacting the employer’s clients or from trying to entice other employees to leave the organization.
Advice for employers looking to include non-compete clauses in their employment contracts:
When employers wish to include non-compete agreements in their contracts, it comes down to the fact that they wish to protect their businesses. Therefore, it is important for them to look at exactly what they are trying to protect.
As noted, non-compete agreements are very difficult to enforce, and other solutions may give the employer the protection they are looking for and be much more effective. One of those solutions – as mentioned – is a non-solicit agreement.
The key difference between a non-compete and a non-solicit is that the non-compete will likely prevent the former employee from working in their field. In contrast, the non-solicit prevents them from poaching the employer’s customers and employees.
It is, therefore, much more likely that a non-solicit will be upheld if it is ever challenged.
Do you have questions about non-compete agreements?
If you are an employer or employee who would like to know more about non-competes, non-solicits, and what they mean for your employment contracts, contact us today to speak to a lawyer.