Non-Compete Agreement | Fillable | PDF | Word | RTF
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A Non-Compete Agreement is a written contract between an employer and an employee. In this contract, the employee agrees that upon separation, he or she will not compete with that employer. The main components of this contact include the length of time the employee must refrain from competing with the former employer, and the geographic locations within which this agreement is enforceable
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Whether or not the Non-Compete agreement is enforceable or not can depend on what state you live and work in. In California, these agreements are non-enforceable, and the only exceptions to this non-enforceability usually involve an owner selling a business or a similar type of situation.
Enforceability of a Non-Compete Agreement may also hinge on the concept of valid consideration – what did the employee get as his or her part of the bargain? Often, if the employee signs the agreement prior to employment, just getting the job might be considered, in some jurisdictions, as valid consideration for the promise of not competing.
On the other hand, if the Non-Compete Agreement is entered into after the job has started, just getting to keep one’s job generally will not be considered sufficient valid consideration. In situations of this sort, for the agreement to be enforceable, the employee must get something else of value, such as a bonus or a promotion, as a valid consideration to give force to the agreement.
Use
The purpose of a Non-Compete Agreement must be to protect an employers trade secrets or business interests. In the case of an accounting concern, a business interest may be that the employee’s accounting clients may opt to follow him or her to a new firm, depriving the employer of their continued business. The employer may rightly fear that a design engineer might take trade secrets from an employer and apply them at a competitor’s business.
In many jurisdictions, the duration and scope of a Non-Compete Agreement may be the key factors used in deciding on the agreement’s enforceability. The courts will generally not enforce an agreement that prevents an employee from working in a geographic area where the employer doesn’t do business. In a case involving trade secrets, the duration generally cannot be longer than the period during which the secrets will provide a business advantage to the employer.
The courts may view one or more of the provisions of a Non-Compete Agreement as being unfair. In these cases, the court might not invalidate the entire contract, but only those specific provisions. The rest of the contract will still be held as enforceable.
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