Are non-competition clauses in employment contracts less likely to be enforced than non-competition clauses?

Why or why not?

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    One Response to “Are non-competition clauses in employment contracts less likely to be enforced than non-competition clauses?”

    1. Yogi Bear Says:

      I am guessing that you are meaning an employment contract based non-competition clause versus a business contract non-competition clause.

      I have worked around Human Resources for over 10 years, and my experience has been that the non-competition clauses in employment contracts are more often enforced in regards to Intellectual Property [Company Secrets or work product, such as in a research environment] and Client Lists [most relevant with Sales people]. Much of the terms of these employment contracts can be "void" if an employee is terminated by the Company, unless the employee signs a release [usually in exchange for a severance agreement] where the non-competition clause is re-stated in the release. Either way, the clauses that forbid you from working within the same industry or for specific competitors [without any backing in terms of IP or Client Lists] are hard to enforce, as the Courts have been known to side with an individual’s need to work overriding the interests of the Company [sometimes regardless of the terms stated in the employment contract].

      Business Contracts with non-competition clauses are more frequently upheld as it is an agreement between two business entities to let the non-competition clause be part of the relationship between them. Violating the non-competition clause in such a contract is a breach of contract and can be very costly to the Company who is breaching.

      I cannot reference specific cases or litigation to support this, as it is basically experiential on my part. I encourage you to do research on employment contracts and non-competition clauses within your state of residence.

      I do hope this helps a bit.

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