What to watch for in a non-compete agreement

On Behalf of | Jul 24, 2019 | Business Law

If you have been handed a non-compete agreement as a condition of taking on a new job, watch out. Non-compete clauses are used by Minnesota employers to keep their trade secrets confidential, but they can also unfairly burden workers by restricting their ability to find employment. So if gaining employment means signing a non-compete, you should watch for several provisions that may cripple your ability to find future work.

An article run on Fast Company points out that non-competes may bind an employee from finding work for a period of years, citing an example of a worker who lost her job and was restricted from seeking a new job in the same industry. Such a long period can make it hard to find work in a transitioning economy. Experts cited in the article recommended non-competes be limited to about a year.

Non-competes can also restrict workers from taking jobs within a geographical area. It is important that such restrictions be specified. Some non-competes encompass a few city blocks. Others may cover a town, a suburb, a city, or perhaps an entire state. If you find your non-compete locks you out of too large a geographical area, your non-compete is likely not being reasonable.

Additionally, non-compete clauses can keep a worker from applying at competing workplaces. Again, specificity is important. A non-compete that merely mentions a whole industry without naming particular companies could lock you out of many job opportunities, since the employer can argue that just about any company that serves that industry is covered by the agreement.

It can also matter if you have been terminated from your job or if you decide to leave on your own. If you are fired, you not only lose a source of income, but the non-compete restricts you from finding work when you may need to find a new job as soon as possible. So check to see if the non-compete has different restrictions if you leave voluntarily as opposed to being fired.

It is possible to negotiate a non-compete clause to give you more favorable terms. The Monster website points out that some employers are willing to waive non-compete clauses if an employee is fired due to layoffs or downsizing. If a non-compete is too burdensome, it may not stand up in court. Some non-competes have been struck down by the courts if they try to bind a worker for too long a period of time, such as up to five years.