What is a Non-Compete Agreement?

According to FindLaw, a non-compete agreement is usually a clause in a contract that states that an employee cannot work for a competing company, or in a similar line of work, for a period time after leaving a company. It is used to protect the company from a former employer leaving and taking clients with them. Courts often rule against non-compete agreements because they feel that it is inherently limiting a former employee’s “right to earn a living.”

The argument that employers use is that there is an amount of goodwill that goes along with working for an established company. So, why should a former employee be allowed to build off of that goodwill?

Another argument that employers will make is that the non-compete is in place to protect confidential information. In this case, the employer must show that it took the necessary steps to keep this information a secret.

At the end of the day, the non-compete agreement must be reasonable. If an employer is trying to block a former employee from making a living, the agreement will most likely be thrown out in the court of law. The same goes for the opposite. If the former employee attempts to steal confidential information, the court will likely enforce the non-compete agreement.

Below, we have provided a video which further explains non-compete agreements:

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