Employees often rush through the onboarding process. They don’t evaluate the contract very carefully, other than to potentially verify terms related to compensation and benefits. Details such as the terms of a restrictive covenant may seem unimportant to a professional excited about a new career opportunity.
Unfortunately, that restrictive covenant and other details from the contract could end up having a major effect on the professional’s future. There are several types of restrictive covenants that employers might integrate into employment contracts.
Non-competition agreements, also known as non-competes, are relatively common. They include provisions that prevent workers from starting a competing organization or taking a job with a direct competitor. Workers who have just lost their jobs or who want to make a major career move may worry about their employer attempting to enforce that restrictive covenant after they quit. If the terms of an agreement are overly broad, the employer may not be able to enforce the agreement later.
Reasonable restrictions are necessary
There are several basic standards that any non-compete has to meet. First and foremost, it typically needs to be part of a valid employment contract or similar written agreement. Additionally, the professional making career concessions generally needs to receive something of valuable consideration in return. In many cases, a job offer is what they receive in exchange for promising not to compete against the business in the future.
Finally, the terms of the agreement itself must be reasonable and appropriate. While state statutes do not have specific rules for when a non-compete is too broad, there are some general guidelines that most businesses try to follow. Typically, it is necessary to limit the geographic area to which the agreement applies. Often, employers limit the area to a certain number of miles or a specific state. An agreement that applies to the entire country or globally may not hold up under scrutiny in court.
Similarly, the non-compete agreement can only remain in effect for a certain amount of time. A few years is reasonable. A decade might not be. Workers who signed employment contracts that included non-competition agreements may need to review their contracts to determine if their employer can enforce them and what options they have for developing their careers while bound by the contract.
Reviewing the language of non-compete agreements with a skilled legal team is an important part of determining whether a professional should limit their economic activities to avoid breaching an agreement. Those subject to overly broad non-compete agreements can potentially move on professionally without worrying about losing a lawsuit brought by their former employer.