Understanding how non-compete agreements work

We live in an era in which entrepreneurial insight and technology are ever-evolving. As a result, companies rush to be the first to introduce their products to the market and more employees are coming into trade secrets than ever before. Because of this, more and more employers are asking their employees to sign non-competition agreements before they are hired to start working for them.

A non-competition agreement is utilized to protect a company’s business interests. They are most commonly used to prevent an employer from having to potentially compete against a former employee for a certain period of time once he or she has left his or her role with the company.

To be deemed valid, not only must the employer have an easily discernible business interest worthy of protection, but their request must be limited in geography, duration and scope. Additionally, the employee must receive some type of consideration for his or her signing of it. For new employees, this can include being awarded a job whereas a company’s more long-term staff may be rewarded with a promotion.

When it comes to enforcing non-compete agreements, they are subject to increased scrutiny compared to non-disclosure agreements. Whereas the latter also seeks to prevent an individual from disclosing privileged information; it as seen as having much less of a potential impact on an employee’s livelihood as it doesn’t limit his or her ability to take a position either in the area in which he or she lives or his or her field of expertise.

In deciding whether it should be upheld, a judge will weigh heavily the duration and scope of the non-compete agreement. As such, the judge will only look to hold the former employee accountable to the agreement only as long as the proprietary information is deemed to be of value.

Likewise, the geographic area stipulation will only be considered to be applicable if the former employee’s work is found to explicitly fall within the territory within which his or her former employer does business. Even then, any non-competition agreement deemed to be too overreaching in its scope, particularly one that seeks to limit the activities of the former employee, can be either modified or thrown out by a judge.

If you or someone you know has either been asked to sign or is covered under a non-compete agreement, a Melbourne, Florida, an attorney can provide guidance in your legal matter.

Source: FindLaw.com, “Non-competition agreements: overview,” accessed March 15, 2017