Answering the question, “How can I find a job in my field and still honor my non-compete contract?” starts with whether or not the non-compete contract is enforceable. Most courts will not judge a non-compete contract enforceable if the language of the contract is unreasonable or unreasonably favors the employer.
In reality, the majority of companies that have you sign a non-compete contract cannot actually enforce them. That is because they have not followed the correct steps or added the correct terms to make the contract enforceable. In most cases, you will easily be able to find a job in your field, when the non-compete contract does not have a legal basis that could be enforced by the courts.
When the non-compete contract was drafted by a large firm, chances are the contract is enforceable, but there still may be some wiggle room. Plus, there must be a benefit for the employee. The question is, did you receive a benefit?
In many cases, courts do not like non-compete clauses or contracts as they tend to favor the employer and are not in the best interest of the public. Non-compete contracts stifle competition and competition, in most cases, is what is best for commerce. Likewise, good commerce is good for the public.
State laws pertaining to non-compete contracts
Depending on the state you reside and where you worked, non-compete clauses may actually not be legal. For example, Oklahoma and North Dakota forbid the use of non-compete contracts in all circumstances. California only allows them in very strict circumstances, if the company shows that the information you’ve been given or learned is of extreme importance and isn’t available from other sources.
Is it reasonable?
Non-compete contracts are only enforceable if the parameters they set are reasonable. For example, if the contract says that you cannot work in a related company anywhere for the next five years, it won’t be enforceable because that is unreasonable. A company cannot bar you from getting a job in your field.
Typically, the non-compete contract needs to set a location parameter, such as within 20 miles. The geographic location covered by the agreement can only be the area in which the company does business. The time period has to be considered reasonable as well, and should not exceed the length of time for which the information is valuable.
What most employees do not know is that a non-compete contract is only legal if the employee (you) is getting some benefit in return. A judge would likely look at these timelines to determine if the contract was reasonable to the employee:
- If the contract is introduced before employment, the benefit could be the employment itself. If the contract is introduced while already employed, then the benefit must be something else, a pay raise, promotion, or bonus, for example.
- If the contract is signed prior to leaving the company, as part of a separation agreement, whether you quit or were fired, you still had to receive some type of benefit.
- If the benefit was a severance pay, then the non-compete contract will most likely only be enforceable for the period of time that severance pay would cover the salary you would have received if still employed with that employer.
In the majority of cases, a contract signed after leaving the company is not enforceable unless there was a monetary benefit.
The reason for a non-compete contract is to protect business interests. This could be clients that an employee has learned of or brought to the company during their employment. It could be knowledge, like trade secrets that are specific to that company and are in high demand within the industry. It could also be to prohibit the employee from luring fellow workers away to start a new company or luring the employer’s customers or clients to your endeavor. The non-compete contract is to protect the company’s business interests.
If you a signed a non-compete contract that is not for these reasons, it is most likely not enforceable. For example, if you are working in a deli, and they have you sign a non-compete in return for employment, that non-compete is most likely not enforceable unless it covered a particular sausage recipe, for example, or some other trade secret. The non-compete contract may forbid you from making that type of sausage for a certain period, within a specified location, even if you developed the recipe while working for the company or brought it with you.
If you are unsure about the legality of your non-compete, then your best option is to consult with a lawyer who can read over your contract to deliver their determination of enforceability. In the event that your non-compete is not legal or enforceable, you are free to find a job in your industry at any business or in any area.
If your previous employer files suit, then you should find an employment law professional or lawyer to respond on your behalf. More often than not, however, no suit will be filed by your previous employer.