When you begin an employment relationship, your employer may ask you to sign a non-compete agreement. Workers need to understand that this agreement grants their employer control over specific actions even after their employment with their company ends. Without a clear understanding of the contract provisions, you could be signing away important rights and privileges that could hamper your future career opportunities.
Various state laws impact the validity and strength of non-compete agreements. They are so controversial some states, like California, refuse to honor them. Making wise decisions before signing a non-compete agreement can prevent serious mistakes that could harm our future. The Crone Law Firm focuses exclusively on Employment Law matters for workers across the Southeast and Middle United States, and we can help you negotiate the best terms for employment contracts like non-compete agreements.
How Do Non-Compete Agreements Work?
The Federal Trade Commission defines a non-compete agreement as “a contractual term between an employer and a worker that blocks the worker from working for a competing employer or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends.”
Non-compete agreements typically have the same basic provisions applying to specifics within the employee-employer relationship. These provisions involve the following:
- Time – Non-compete agreements usually specify a time period during which the former employee cannot work for a competitor, use trade knowledge, start their own similar business, or otherwise violate the terms of the agreement.
- Prohibited Actions – Non-compete agreements spell out prohibited actions after an employee leaves the company. This includes practices, techniques, information, type and scope of work, and other actions.
- Location – Non-compete agreements typically apply to specific geographical areas.
- Competition – Non-compete agreements usually define the competition for which a former employee is prohibited from working or the type of industry they must avoid.
- Penalties – Non-competes also usually spell out the penalties an employee will suffer if the agreement is breached.
Your non-compete agreement may contain other provisions. You should always review any employment contracts with a knowledgeable attorney to ensure your rights and interests are protected.
Common Mistakes in Non-Compete Agreements
While non-compete agreements are not illegal, they are controversial due to the limitations they place on workers. Some agreements are too broad and restrictive, and entering into them seriously hampers an employee’s freedom and future livelihood. Here are some of the most common mistakes you can make in a non-compete agreement.
Too Much Time or Territory is Prohibited
Most non-compete agreements last for a few months or a year. Anything longer than that is far too restrictive on your freedom to work. Large prohibited geographical areas can also be restrictive, even forcing them into an expensive move to be able to work.
Preventing the loss of trade secrets or proprietary information is understandable, but beware when a non-compete contains a long list of specific prohibitions. You need some freedom of action when you decide it’s time to leave an employer. You have to make a living doing what you know. Too many restrictions could seriously hamper your efforts to even make a living.
Avoid signing any non-compete agreement where you are not offered something worthwhile in exchange. For example, if your employer wants to prohibit you from working for similar area companies for six months after leaving the company, ask for six months of severance pay and continuing insurance coverage to take care of your family.
Get Sound Legal Advice from The Crone Law Firm
Our Employment Law Attorneys have extensive experience with non-compete agreements from both the employee’s and employer’s perspective. We are happy to review any proposed contract to make sure your legal rights are protected and your career future is not unduly restricted.
Contact us today by phone or online to schedule a FREE case review in Memphis, St. Louis, or Chicago.