What to Know About Noncompete Agreements

A nationwide ban on noncompete agreements was supposed to happen in September, but a judge struck that down. This means that existing noncompete agreements will remain in place and employers are allowed to ask you to sign one as a condition of employment. Congress or a higher court could decide otherwise, but such a ban could take years.

So if you are working under a noncompete agreement or expect to in the future, here’s what you need to do.

Understand the Requirements

Be sure to read the agreement carefully. Noncompetes typically prohibit you from working for your employer’s competitors within a certain distance for a given period of time. For example, you may be prohibited from working for a competitor within 20 miles of your current job for one year after leaving.

As an employee, make sure you know the constraints and what, if anything, you will get in return. Look for:

• Scope: What industries or roles does it restrict?
• Duration: How long does the restriction last?
• Geographic limit: Where does the restriction apply?
• Activities prohibited: Does it prevent you from working with competitors, starting your own business, or serving clients?

Also, make sure “location” is defined. Is it based on your current work site or all locations of your company?

Find Out State Restrictions

Some states restrict noncompetes altogether. Florida does allow noncompete agreements. Just four states — California, North Dakota, Minnesota, and Oklahoma — have full bans. Thirty-three states have some restrictions.

Assess the Reasonableness

Not all noncompetes are enforceable. Some are way too broad and restrictive. There needs to be some degree of reasonableness. For example, an agreement of up to one year is reasonable. The agreement should protect a legitimate business interest, such as trade secrets or relationships with key clients.

Also, the agreement cannot impose an undue hardship on the employee. The worker should be able to get another job nearby in a reasonable amount of time. In addition, the agreement cannot cause harm to the public. Courts are more likely to reject agreements that prevent individuals from finding new work or harm economic competition.

Negotiate the Terms

If the terms are too restrictive, you can try negotiating:

• Shorter duration. Ask to reduce it from, say, 12 months to 6 months.
• Smaller geographic scope. Limit it to specific cities or regions.
• Narrower activity restriction. Limit the noncompete to certain roles or projects.
• Exempt specific clients or industries. If you already have a relationship with a client, ask to carve them out.

Learn More About Noncompete Agreements

Noncompete agreements are not fully banned in the United States yet. Sometimes the agreements are enforceable, sometimes they’re not.

These documents can be tricky. Orlando noncompete agreement lawyer B.F. Godfrey from Godfrey Legal can assist you. Businesses need to take advantage of the competitive edge such agreements can provide, and employees need to take steps to protect their legitimate interests. To schedule a consultation, fill out the online form or call (407) 890-0023.

Source:

cnn.com/2024/09/02/business/noncompete-agreements-what-to-know-now/index.html