Employer breaches the contract

If your employer put the non-compete provision in an employment contract spelling out compensation, insurance and other conditions of employment, it is important to have an attorney go through the contract line-by-line. If the employer breached the agreement by failing to pay all compensation due, failing to fulfill the insurance requirements, or failing to meet some other obligation, the employee is relieved of all obligations under the contract.


No legitimate interest to enforce

Many employers attempt to overreach their legitimate business interests, and this is one of the most common mistakes. For instance, an employer has no legitimate interest in enforcing a non-compete against low-level employees such as receptionists and clerical employees. An employer who manufactures computer software for accountants probably can't prevent an employee from working on software for doctors. An employer who is phasing out of an area probably can't prevent an employee from working in that area. Same with an employer who abandons a particular customer, area of business, or product. The statute allowing non-compete agreements assumes that the following are legitimate business interests: a. Trade secrets; b. Valuable confidential information; c. Substantial relationships with specific prospective or existing customers, patients, or clients; d. Goodwill associated with an ongoing business or professional practice; e. Extraordinary or specialized training


Agreement is for too long a time period

For employees, a period of less than 6 months is presumed valid, and over 2 years is presumed invalid. In between, the employer will have to prove that the time period is reasonable. However, most courts will assume that agreements up to 2 years are reasonable. Some judges will find agreements under 3 years reasonable because there is a related statute finding 3 years reasonable when there is a former business owner selling a business. But anything over 2 years is going to be a hurdle for the employer to overcome.


The so-called confidential information is something readily available to the public

Many companies get their sales leads from public sources. Phone books, professional directories, the internet, notification services, are all sources that are available to anyone in the industry. So an employer who claims they are protecting their valuable secret client sources is going to have to show that the information was not available to everyone else in the industry. Existing customer lists or unique sources are protected, but chamber of commerce directories are not.


Public health or safety would not be served

This primarily applies to doctors, nurses, and people in specialized scientific and health areas. If there is a shortage of people in a particular specialty, or in a particular geographic area, then the employer cannot enforce a non-compete even if all the other requirements are met. If you are one of 10 brain surgeons in the country who can perform a particular procedure, your employer probably can't prevent you from saving people's lives.


What to do if an employer tries to enforce or impose a non-compete agreement

In general, I tell people to assume their non-compete agreements are enforceable, and not to sign them unless they can live with the restrictions. But an employee with the time, will, and resources to fight can frequently limit or eliminate their non-compete provisions. And an employer who tries to enforce a non-compete and fails will end up paying the attorney's fees and costs of the prevailing employee, and will sometimes be paying money damages to the employee for tortious interference with an employment relationship if they cost the employee a job. If you're leaving a job and you have a non-compete, the best thing to do is get advice from an employment attorney before you leave. If you get sued to enforce a non-compete, you MUST contact an employment attorney immediately to defend yourself or you will lose your new job, you will have a money judgment against you, and you will have no ability to raise any defenses to the non-compete agreement.