Do Non-Compete Agreements Hold Up?
Each state has its own standards with respect to the validity of non-compete agreement. For specific information on your state’s non-compete laws seek counsel from an experienced attorney. However, there are 3 signs your noncompete agreement won’t stand up in court.
It can be a challenge to draft a noncompete agreement, especially if you’re not an attorney. Out of inexperience and confusion, many companies draft overly broad and restrictive non-compete agreements that won’t hold up in court. It can be expected that courts will not enforce agreements that unduly restrict an individual’s right to work or to seek work. The best noncompete agreements are carefully drafted to take into consideration a realistic restriction that benefits the former employer without unduly restricting the employee from earning a living.
Employers must avoid drafting noncompete agreements that restrict a departing employee’s ability to work or make a living. If the restriction on the employee is for an unusually long period of time, there’s going to be a problem. One to two years is typically reasonable, while three to five years is unlikely to be upheld by a court. Courts also tend to frown upon non-compete agreements that don’t allow an employee to leave the region or state and continue to work, A non-compete agreement is unenforceable, if the geographic scope of the restriction is far too broad. It depends on the type of business the employer has, but it usually cannot be broader than the geographic area in which the employer does business.
Depending on the state or states a business operates in, creating a non-compete agreements may be a waste of time. An employer needs to make sure that the noncompete agreements is valid in the state it is doing business in. If an employer attempts to enforce a void non-compete agreement, it could be liable for unfair business practices, entitling the employee to restitution and their attorney’s fees.
As with any legal document, clarity is key. If any language in the non-compete agreement is ambiguous, confusing, or contradictory, a court will construe it against the employer and in favor of the employee. Take these issues into consideration when drafting a non-compete agreement. Better yet, consider consulting with an experienced attorney in drafting an agreement so that you have an enforceable agreement that is reasonable with clear and explicit expectations