Invalidating A Non-Compete Agreement
There are a mixture of emotions new employees feel when they start in a job. Generally, a new employee, is excited to embark on a journey with a new employer. Furthermore, they are also anxious about “fitting in” with colleagues in the workplace.
Challenging a Non-Compete AgreementWith a basic understanding of how a court will examine a case where an employee challenges a Non-Compete Agreement and which factors they will consider specifically, two questions arise:
- Should an employee actually challenge a Non-Compete Agreement?
- How exactly does an employee challenge a Non-Compete Agreement?
When it comes to the first question, an employee, or the employee’s lawyer, should examine the Non-Compete Agreement’s language, focusing specifically on duration, breadth of restriction, and geographic scope. If any of these factors seems to unreasonable and prohibit the employee’s right to earn a living after leaving the company, challenging the agreement potentially is the best move.
The second question, the “how,” is a slightly more nuanced question. There are three basic approaches an employee might take to challenge the validity of a Non-Compete Agreement:
1 – Ignoring the AgreementAn employee could simply ignore the Non-Compete Agreement and work for a new employer. With this method, employees avoid the costs of bringing an action for declaratory judgment. Still, the obvious downside is that by ignoring a legal document signed, employees open themselves up to potential liability.
While ignoring a Non-Compete Agreement is an option, the potential exposure for the employee makes it a last-resource move to be made in the most limited of circumstances and many legal experts would advise against it.
2 – Negotiating with the EmployerEmployers generally have a strong interest in enforcing Non-Compete Agreements on former employees. From a financial standpoint, they do not want their competitors to benefit from the experience, skills, and information employees acquired during their time working for their company. From a practical perspective, employers do not want current employees to think they are allowed to leave whenever they want without legal consequences. From a legal standpoint, when a company fails to take proper legal action to enforce Non-Compete Agreements, a court may invalidate the Non-Compete Agreements they try to enforce in the future.
However, most employers do not love the costly and time-consuming process litigation involves. When departing employees maintain a good relationship with their former employers, there are circumstances under which renegotiating the terms of a Non-Compete Agreement may be possible.
For example, when employees are terminated, they are often asked to sign a “release of claims” agreement in exchange for a severance amount. This provides an opportunity for employees, or their lawyers, to renegotiate the Non-Compete Agreement.
If negotiating the Non-Compete Agreement is an option, the first step employees must take is to hire an Employment Lawyer who understands the nuances of this kind of agreement and knows how to renegotiate the terms of a contract that has already been signed. At Jurado & Farshchian, P.L., you will surely find the right lawyer for your case.
3 – Filing a Declaratory Judgment ActionIf negotiations do not work or are not an option, departing employees should strongly consider the last and final option, filing for a declaratory judgment and request for the court to invalidate the Non-Compete Agreement.
A benefit to this approach is the certainty afforded to departing employees who are pursuing new opportunities in their careers.
In a declaratory judgment action, the court evaluates the case and determines whether the Non-Compete Agreement is valid and enforceable.