Non-Compete Agreements prevent present and former employees from working with competitors. They are also designed to keep an employer information, client lists or trade secrets from going to a competitor
Court’s uphold non-compete agreements if they meet certain requirements. The employee found to have violated the non-compete agreement may be subject to damages or an injunction.
Any company that is involved in an employee’s breach of a non-compete may also be liable.
California is a state however which favors the employee and if the non-compete agreement is too restrictive the courts may not enforce a non-compete clause at all.
There are several reasons why California does not favor non-compete clauses. Employers have most of the power. Employees have very little leverage to negotiate or bargain for a contract without a non-compete clause. Therefore the courts have found these clauses to be unconscionable.
When an employee starts with a new company they are usually trying to make a good impression.
Finally, non-compete clauses make it difficult for employees to gain future employment or become self-employed.
The Principles of Non-Compete Agreements
States differ in how their laws are written to deal with non-compete clauses. However, there are certain key principles that are very similar across the states. Examples of some of these principles include:
· A non-compete clause in a contact must be reasonable in order for it to be considered valid.
· Some states require the employee to receive independent consideration before it'll recognize a non-compete clause.
· Courts usually require that non-compete contracts don't last too long. The time period must be limited.
· Courts will also check to see if the geographic limits of the contract are reasonable. Non-compete clauses shouldn't restrict employees from working in other geographic areas that won't affect the former employer.
· New employers that hire employees with non-competitive contracts can be sued for damages in some states.
Clients should always consult an attorney when drafting a non-compete contract.