Noncompete agreements have long been a common inclusion in employment contracts. Businesses seeking to protect their trade secrets and competitive advantages may require that certain workers sign noncompete agreements.
Frequently, noncompete agreements are part of the contract signed at the time of hiring, although they are sometimes part of a severance package agreement. Both businesses and workers benefit from understanding when noncompete agreements are enforceable.
When can employers take former workers to court over alleged noncompete violations?
When the agreement meets all necessary standards
For employers to enforce noncompete agreements, they must first show that the contract is valid. An enforceable noncompete agreement should provide the worker giving up the option of competing with something of valuable consideration. In many cases, a job offer is what compensates the worker.
Additionally, the non-compete agreement typically needs to be reasonable. If the agreement remains in effect for the rest of a worker’s life or prevents them from taking a job in the same industry anywhere in the country, the courts may determine that it is overly broad and unenforceable.
When unfair competition occurs
Enforcement of a valid noncompete agreement is only an option when employers have documentation affirming that workers took a position with a competitor or started a competing business. Employers seeking to enforce noncompete agreements must convince the courts that a violation occurred in order to request an injunction, enforce penalty clauses or seek damages from the former worker.
Learning more about the nuances of noncompete agreements and other restrictive covenants can be beneficial for both workers and employers. Those facing disputes about noncompete agreements may need help assessing the issue.
