how binding are non-compete clauses in employment contracts?

I have an interview for a job on Monday. It is with a company performing the same type of work I do at my current job. Apparently, when hired, I signed a non-compete agreement. The agreement actually lists certain companies I am prohibited from working for and then says I can’t work for any company involved in similar work for a year. I didn’t realize what I was agreeing to because it was my first job out of college, I was just excited to get a job offer. Basically, I signed something saying that I can’t work for any company who does what I want to do for a year after I quit my current company (Its what my degree is in!). I would have to get fired or laid off or work for Taco Bell for a year. Do they really expect a person to stay with the company until they retire? How can they do this? What will happen if I break the agreement? I’m pretty sure the other company is going to offer me the job– they contacted me.
Unfortunately, I believe if it went to court, they would win. I have a special skill set that the current employer trained me to have. The new employer is asking for this skill. The new employer is also asking me to divulge whether or not I have signed a non-complete clause. They said it won’t necessarily keep them from hiring me, but I have a feeling it will. My problem is that I feel my current company is going under. They reassure us they are not, but we have had layoffs and a ton of restructuring.
I just want to do a job I love. I drive an hour and a half each way to work… there is nothing closer, and this would be a good opportunity for me. I work for a company with sites all over the world. While my leaving would probably hurt my site, the company would be fine. I’m just wondering what I’m up against.

Related Blogs

Tags: , , , , , ,

5 Responses to “how binding are non-compete clauses in employment contracts?”

  1. Howard L Says:

    This will be impossible to answer without knowing exactly what your present duties are, what they will be, and what company plans or proprietary information you know.

    Non compete clauses are enforceable in court but on the other hand you have a right to make a living. If it goes to court generally speaking your present employer would need to prove that your working for the other company would hurt their business. I believe more often than not the employee wins.

    A bigger danger is that if your new employer finds out you are subject to a non compete clause they may rescind the offer they made you or let you go rather than risk legal action.

    I have had to sign many non compete clauses over the years and only had one enforced while in a management position. If you’re just a year or two out of college I would guess that you won’t have a problem.

    My advice then; don’t mention it to your new employer but don’t lie if asked. I doubt that you know anything your present employer would be concerned about, but only you know what you know.

    After reading your response remember that everybody gains experience and new skills as they progress in their career. My employers have sent me to various schools and taught me new procedures and it has not stopped me from changing companies even though I had been required to sign non compete agreements. I would think that as long as your skill does not involve a trade secret or proprietary data you should be OK. In some cases I knew secrets and company plans about new markets. Frequently when starting a new job there has been a form the new employer asked me to sign stating that I understood I was being paid for my skills but that I was aware that I could not use or give out any proprietary information from my previous employer. It can be a very gray area.

  2. Snuggler0619 Says:

    Sometimes the non-compete clause refers to you starting your own company. Sometimes not. You should ask for compensation ( or a golden-parachute clause) during the time you are terminated and before starting work, for another company. Of course, if you do not sign the agreement they won’t hire you in the first place. Most companies use this clause to keep you on longer or end any efforts to "compete" against them. It’s usually left up to the company as to weather to pursue the contract in court. Yes, courts do enforce the contract especially where license and customers are concerned.

  3. gardianangel Says:

    A non-compete clause not to compete, is a term used in contract law under which one party an employee agrees to not pursue a similar profession or trade in competition against the employer. As a contract provision, a non-compete clause is bound by traditional contract requirements including the consideration doctrine. The use of such clauses is premised on the possibility that upon their termination or resignation, an employee might begin working for a competitor or starting a business, and gain competitive advantage by abusing confidential information about their former employer’s operations or trade secrets, or sensitive information such as customer/client lists, business practices, upcoming products, and marketing plans.

    A business might abuse a non-compete covenant to prevent an employee from working elsewhere at all. Most jurisdictions in which such contracts have been examined by the courts have deemed the contracts to be legally binding so long as the clause contains reasonable limitations as to the geographical area and time period in which an employee of a company may not compete. Courts have held that, as a matter of public policy, an individual cannot be barred from carrying out a trade in which he/she has been trained except to the extent that is necessary to protect the employer.

    The extent to which non-compete clauses are legally allowed varies per jurisdiction. Some jurisdictions, such as the state of California, do not allow non-compete-clauses at all. Since your state is not listed in your question, I can not determine if your state legally allowes non-compete clauses. In addition, the distance between your current employer and prospective employer is not clear, nor whether the non-compete clause addresses the procemety of the new employer from your current employer.

    If the special skill set that your current employer trained you in can be trained by the prospective employer, than this has no bearing with respect to the non-compete cause, provided it does not divulge any of the information I listed above with respect to your current employer.

    I hope this information has been helpful, please feel free to email me if you would like to discuss further.

    Best wishes.

  4. CatLaw Says:

    Non-compete clauses are legally binding in every state. Many court cases have been based on a former employer going after a former employee who has broken this agreement. Legally it is a contract.

    Each state has their own requirements on how much restrictions can be included in a non-compete. Generally the employer can restrict the employee in location and in time, the average time is about 2 years. Yes, legally you would need to get laid off, or work for Taco Bell, or work outside your specialty for that one year. Yes, they really expect a person to do that and Yes, they really will sue you and your new employer in court for lots of damages if you break the agreement.

    To add to that you are not playing fair with this new company by denying that you signed a non-compete. Actually you are lying about it and the new company can terminate you for such a lie. The reason the new company is so interested in the non-compete is that if the former company attempts to enforce the non-compete agreement they can sue not just you, but the new employer. Even with a special skill set no employer want to take on an employee who brings their own litigation problems.

    You need to be honest with this new employer BEFORE you accept the job. If you are not, it is a good bet that you will lose both jobs and your reputation. If the current company is going under you may be able to negotiate a waiver of the non-compete agreement so that you can go to the new job.

    Contact a local employment attorney to help you in this. You signed a legal agreement with your current employer, this is not something that you can just brush off, you will need to address this before you quit..

  5. sophieb Says:

    If you really wish to leave the company you’re with now then be sure to tell the company you’re interviewing with at the end of the interview when they say they intend to hire you that you have a non-compete clause in the contract you’re with now and ask if they can have you in another position and work into the position you want after a year. Anything can be negotiated if you’re wanted and you’re good enough for them to invest in you. They could agree to that lowering of your job just so you can work for their company but then your salary may be less along with your duties. Or if they want you bad enough they will negotiate with the company you’re now working for and pay them the amount they would have sued for.

    If you’re left with still working for the old company they will know you’re not a company man (at least not to them) and may hold back any promotions or salary increses knowing that you want to leave them.

    but yes, non-compete contracts are truly contracts and you don’t win those in court….Like I said though, negotiations do take place.