How Can I Avoid Violating My Non-Compete?
A non-compete is usually given to you as a condition of your new employment. Oftentimes you’re so excited about your new job that you sign it without a second thought. But what happens when a better job opportunity comes along and you can’t take it because of your non-compete? Although it may seem like you have no choice in signing the agreement, that’s not always the case. There are several ways to get out of your non-compete contract.
Here are the most common ways to invalidate your non-compete:
LEGITIMATE BUSINESS INTEREST
For a non-compete to be valid, your employer has to show that it is reasonably necessary to protect their legitimate business interests.
There are five specific legitimate business interests:
- Trade secrets;
- Valuable confidential information;
- Substantial relationships with existing or future clients;
- Business goodwill or reputation;
- Specialized training.
If your employer argues a business interest, you then have to prove that it’s not legitimate. You can challenge the first three by showing that you did not have access to trade secrets, confidential information or customer lists. You can also argue that the information is not a legitimate business interest because it’s available to anyone in the industry. For example, it is not confidential if your company gets client lists from phone books, social media (think: LinkedIn) or other public lead sources.
A material breach by your employer may also invalidate your non-compete. Your attorney will need to analyze whether your employer abides by each section in the employment agreement. Your employer can also breach the contract by violating Florida’s Fair Labor Standards Act. This argument is a bit harder to win because Florida courts have nearly erased the “prior breach” argument.
Another area where employers try to handcuff their new hires is by having a lengthy non-compete period. This term usually says the employee cannot work in a related area for X years after leaving their employer.
A non-compete agreement is a contract between an employee and employer. A non-compete prohibits an employee from engaging in a business that competes with his/her current employer’s business. While an employer cannot require you to sign a non-compete, they may terminate, or choose not to hire you if you refuse to sign. Courts generally do not approve of non-compete agreements. In disputes over non-compete agreements, courts consider certain factors to decide if the agreement is reasonable. If you find yourself negotiating a non-compete agreement consider limiting the agreement to only what is necessary to protect the employer and ask for a severance payment in the event that you are terminated.
While non-compete agreements are analyzed under state law, and each state is different, there are some common factors that courts look at to determine whether a non-compete agreement is reasonable:
- Does the employer have some legitimate interest it is protecting with the agreement?
- What is the geographic scope of the restriction? Will it keep you from making a living?
- How long is the non-compete agreement in force?
- Does the agreement keep you from doing a type of work very different from what you had been doing?
- Did the employer provide you with additional compensation or benefits in return for getting your agreement to sign the non-compete?
Each state has its own standards with respect to the validity of non-compete clauses. For specific information on your state’s non-compete laws and pending legislation, please check with an attorney in your state. At the federal level, the White House published a 2016 report on non-compete contracts in employment, holding that they “can impose substantial costs on workers, consumers and the economy more generally.”