Before starting work, many companies require new hires to sign non-compete agreements. While they cannot physically force you to sign the law, your employment prospects may suffer if you do.
Despite this, you shouldn’t just sign anything that is placed in front of you. You should comprehend what a non-compete agreement is and how it is or is not legally enforced before signing one.
What Does a Non-Compete Law Entail?
Employment contracts frequently contain non-compete clauses. When an employee signs a non-compete agreement, they declare their intent to never again work for one of their employer’s rivals.
The following situations are just a few where the law might be used:
- Time frame: Since how long has the non-compete law been in force?
- Area: What geographic area is covered by the non-compete law?
- Competitor: What is considered your employer’s competition?
- Liquidated Damages: How much money do you owe your former company if you violate the non-compete agreement?
- Recoup: What advantages do you obtain for signing the non-compete agreement?
What Purpose Does a Non-Compete Law Serve?
Although it might appear that non-compete agreements are primarily used by businesses to safeguard their talent, this is not their official justification in law.
Non-compete agreements are frequently signed by staff members in product development to safeguard trade secrets. Laws regarding non-compete disputes differ widely. Prior to signing, research the laws in your state.
What Does a Non-Compete Law Cover?
A non-compete clause is just as effective as the court’s willingness to uphold it, just like any other type of contract. Your employer has the right to file a lawsuit if you break the terms of the non-compete agreement. You probably don’t want to end up in litigation, but it is a worst-case scenario if you and your employer have an irreconcilable dispute.
You cannot anticipate how a particular court will apply your non-compete law. However, when evaluating a law, the courts frequently take into account a number of factors.
Generally speaking, laws that are narrowly defined in terms of duration, region, and industry are more likely to be upheld.
The court will look into whether the law makes it impossible for you to make a living. It is less probable that the legislation will be upheld if it prevents you from performing quite different job in a new position.
A company that needs a non-compete agreement must also show that it has a strong justification for having one.
Courts may also take into account the type of work you did, how long you were employed, and any specialized training you obtained while working there.
It is a last resort to take a non-compete clause to court. You will be obligated to pay your former employer any liquidated damages specified by law if a court determines against you.
What Must I Complete Before I Sign a Non-Compete Agreement?
Learn about the rules governing non-compete agreements in your state before signing one. Next, read the agreement in its entirety. If at all feasible, speak with an employment attorney who can inform you of any clauses that are significantly outside of what is permitted by law in your state. If you have concerns, a lawyer might be able to assist you in negotiating conditions that are more advantageous. You might even be able to obtain a complete waiver of the non-compete clause in specific circumstances.
Consulting a lawyer first is a necessary precaution if you find yourself in a situation where you might break the law. Although non-compete clauses in contracts can be alarming, you can safeguard yourself by reading them carefully.