Employment law holds various stipulations between a company and its employees. One of the most disputed and unclear agreements is the non-compete agreement when an employee is terminated from the company or leaves on their own accord. The employees are bound by the contract that they must not work for the competitors after leaving the company. Most situations are up to two years.
Employment law protects the company as it hurts most workers if they must leave a job unexpectedly. Some agreements are legal and will be held up in court, while others are not. It depends on the state laws and if there is a legit reason to argue that the non-compete agreement should be enforced.
The primary issue is whether it will hurt the company for the worker to go with all the company secrets to work for the competitors. And are the company secrets actually “secrets.” Those are the two main issues that will answer if the non-compete agreement is enforceable.
What are Non-Compete Agreements in Employment Law?
Non-compete agreements are agreements between two parties where a worker will not work for the competition for fear that the company secrets will be handed over to that employee. It also stops a business seller from becoming the competition of the person purchasing their business after the sale. Non-compete agreements are made between companies and their employees in three primary ways.
- Signed agreements while the employee is employed with the company.
- Signed agreements for when the employee is terminated or leaves on their own.
- When businesses are sold, the business owner selling signs a non-compete agreement.
Each state has its own laws concerning non-compete agreements. Some follow the deal, while others are not as strict on the ruling. Many courts are beginning to side with the employee if it deals with returning to work after termination. So, are they enforced? It depends on the situation in which the law is not distinguished.
Enforcing Non-Compete Agreements from the Employer’s Side
Employers have the heavy responsibility of proving that there is a breach of contract in a non-compete agreement. They must prove that an employee who was terminated or resigned took information from the company to deliver to the competition. The company must also prove that the data are secrets that can hurt the company if given to the competition.
In such cases, the information is based on the employee’s role and can take away the company workers, clients, or customers. Some data could also be included in software, patents, ideas, and other methods designed and created by the company. Once again, depending on the state laws, there is no guarantee that a claim will hold up in court with the signed agreement.
How Non-Compete Agreements Hurt Employees
Thirty-three percent of states do not acknowledge or enforce non-compete agreements. Across the nation, more people in offices notice that the contract hurts the employees more than it helps the employer.
In 2021, representatives worked to devise a bill to assist employees faced with these hardships from the contract agreement. More states are leaning toward not enforcing the agreements. During times of job loss and rise in unemployment, those who lose their jobs cannot return to their field of specialty. This keeps the unemployment rate high and hurts the economy, the employees, and their families.
If employees have all their training in one field, they must get other training or training to do something else. This is most inconvenient, and the courts and lawmakers are working to devise a resolution that works for all parties involved.
Bending the Rules
Here is when the courts tend to side with the employee. They look into the whole agreement and try to work something out in favor of the employer to keep their business safe while “bending” the rules to allow the employee to return to work. Most contracts require a 50-mile radius from the competition or a two-year agreement. Some are six months, but most states have a two-year gap.
The loophole deals with the secrets of the company. If the company fails to show that they have classified secrets, the courts may overturn the contract and allow the employee to work with the competition. When the company has nothing to lose, there is no reason to keep a worker from returning to work in their field.
Mistakes with Non-Compete Agreements
Several mistakes were made on both sides of the agreement while signing a non-compete agreement. Employers must consider their employees when they require the signing of a non-compete agreement. The employee is devoting their time and efforts to the company. Therefore, there must be an incentive or benefit for the employee. Merely signing the agreement only benefits the employer without regard for the employee’s well-being. These situations are thrown out of court.
If the time frame is too long for the employee to not work for the competition, then the courts may rule in favor of the employee. The employer must consider the time frame and what they request from the beginning. Anything over two years is no good; anything over a 50-mile radius will not work in the courts.
Every agreement must be different for each individual and role within the company. One contract in writing will not suffice for all the company employees. Some employees may not have any knowledge at all of the company secrets or have access to data. These employees should be exempt from the agreements.
Contact Trapp Law, LLC. For Non-Compete Agreement Issues
Trapp Law, LLC understands there are two sides to the non-compete agreement. The company may have a case if the agreement is violated. Employees can leave intending to hurt the company, and breaking the deal is the best way to do it. Trapp Law, LLC can work to protect your rights in the case of a breach of contract. Contact us immediately to answer your questions and concerns in a free consultation to review the case.