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Non-Compete Agreements, Are They Valid?

Posted by Kathy Harrington-Sullivan | Aug 10, 2004 | 0 Comments

You landed the job you've been working for all your life. It offers a competitive salary and benefits and is the ideal step on your career path.

The only problem is – per the law, you're not allowed to accept it. You signed a non-compete agreement at your last job, and your previous employer isn't going to let you jump ship without a fight.

Almost every state in the nation has an employee non-compete agreement law on the books, but legalities vary greatly between each state. Furthermore, the use of non-competes in the hiring process in growing. According to the Wall Street Journal (WSJ), non-compete agreements among chief executives rose nine percent between 2000 and 2010. And it's not just the top brass who are forced to sign the dotted line – it's become a requirement for salespeople, assistants and service workers as seen by the infamous Amy's Baking Company contract.

Why non-competes are the norm?

In an increasingly competitive marketplace, companies are concerned that without a non-compete, an employee would bring along confidential information or sensitive data, such as client lists, trade secrets and marketing plans, to a rival firm.

Yet, for honest employees who want a new challenge in their careers, the non-compete can be stifling. The WSJ reported that the number of departing employees getting sued by former employers rose 61 percent over the past decade to 760 cases last year. But, said the WSJ, as most cases are settled out of court, that number is likely incredibly low.

While non-competes may be good for a company's assets, experts agree that the laws are choking the economy and having a negative effect on the nation's entrepreneurship. Start-ups and small businesses are essential in growing our industries, but if their work is repressed by non-competes, as Fox News reported, it could be the “fastest growing threat to our economy.”

California, where non-competes are usual unenforceable, is known for being a mecca for startups and entrepreneurial tech businesses. On the other hand, reported WSJ, in Michigan, which began enforcing noncompetes in 1985, workers were “less likely to start their own businesses or jump to a startup or small firm.”

Hope for employees and hope for growth

Although non-competes still reign, there is a shift toward the benefit of the employee. Many potential employees are using noncompetes as a bargaining chip to score higher salaries or greater benefits when negotiating a new job.

In many cases, if the company wants the potential employee bad enough, it may alter the non-compete, whether than means cutting the requirement by half or eliminating it altogether by allowing the employee to sign a non-disclosure or non-solicitation agreement instead, giving him or her the freedom to move jobs if important company information is never disclosed.

To protect your future, no matter your industry, it's important to read over the non-compete agreement before accepting a job offer, and for added security, to run it by your lawyer. Just as critical, you must revisit your agreement with your lawyer to understand any issues before looking for or accepting a new position. In some cases, your new and previous employers may work together on a settlement that's beneficial for everyone involved.

Your career is too important to let someone stand in your way of growth. Understanding the ins and outs of your non-compete and working with a lawyer to navigate your state's laws can protect your career now and in the future.

About the Author

Kathy Harrington-Sullivan

Kathy Harrington Sullivan is a Partner at Barrett & Farahany and manages the firm's case evaluation team. Because knowledge truly is power, Kathy and the Atlanta employment attorneys on her team regularly consult with and empower potentia...

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