The basics of defending a non-compete clause

Noncompete clauses are used by employers and businesses to protect their investments former employees and business partners. The goal of noncompetes is to make it expensive for employees and business partners to leave a relationship, therefore, stifling the competition before it starts up. This post will go over the basics of defending against enforcement of noncompete clauses.

Most noncompete clause lawsuits are initiated by the employer and start with an action for temporary injunctive relief. Temporary injunctive relief means that you are enjoined (prohibited) from engaging in a particular behavior. Regarding noncompetes, you are prohibited from working for another employer.

For employees, it is critical that you win this initial stage in the lawsuit. If you lose, you are prohibited from working for another employer for the duration of the lawsuit. Granted, your limitation is based on the terms in the noncompete clause however it is still likely to impose an undue burden.

A common defense raised by employees is that the employer breached the contract first. When you raise this defense, the court will engage in a breach of contract analysis to determine if the employer’s breach was “material.” A breach is material if it goes to the heart of the contract, e.g. the employer fails to pay the employee a wage. Once the court determines if it was material, the court then decides if invalidation of the noncompete is sufficient compensation for the breach.

If you believe your former employer is going to sue you to enforce a noncompete clause, you may want to contact an attorney. While you can defend against these suits, it is highly subjective when it comes to what provisions are enforceable and to what extent. Generally, the court will parse what is fair for your profession and what isn’t. A lawyer can help you craft compelling arguments to ensure that you are able to earn a living after you end a business relationship.