Something that is seldom thought of when first seeing a non-compete agreement is whether or not an employee would be paid while the non-compete is in effect. The non-compete prohibits an employee from earning a living after leaving the employer. Being paid during a non-compete can be an important part of the agreement and has advantages to both the employer and employee. However, it is extremely rare for an employee to be paid after the employment agreement is terminated and the non-competition clause begins.
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What is a Non-Compete Agreement?
A non-compete agreement is a contract that is given to new employees upon hiring. It is an agreement that the employee will agree to not work with a competitor in a similar position for a certain period of time after the termination of the contract. The time to not compete will cover typically from 6 to 24 months, depending on the business. It also will prohibit the employee from competing with the employer within a geographic range as well.
Why Would You Want to be Paid During a Non-Compete?
Employees would want to be paid during the time they are not allowed to work for a competitor because they will be limited in work they can do that won’t compete with their last employer. It solves the problem of finding a job that isn’t prohibited under the contract agreement. However, there is no benefit to the employer in agreeing to this and it is very unlikely they would agree to language providing compensation to the employee once the contract terminates.
Should the Employee Compete?
It’s pretty obvious that the employee would benefit from such an agreement. They would be getting an income during the period laid out where they could not work against the employer. It would also provide an incentive to the employee not to violate the agreement and end up getting sued.
Do We Have to Benefit the Employer?
When the employer must consider that he will pay the employee for the duration set out by the agreement, he will hesitate in making the time and geographic scope of the contract extensive. If the employer does need to enforce the noncompete agreement for any reason, he will have the contractual right to do so.
Do You Have to Obtain Agreement Review?
When receiving a non-compete agreement, it is a good idea to have a contract attorney look it over and ensure it is covering your best interests. Some agreements can be made for a very long time and over a wide area, making it almost impossible to find work near your home. An attorney will look after your interests and ensure you will be protected when signing the agreement.
Is a Non-Compete Agreement Enforceable?
Many ask are non-compete agreements enforceable? Non-Compete agreements are an important aspect of business and help a business prevent unfair opposition. They are created to try and prevent any unfair competition between an employee and an employee’s previous employer. When a non-compete is well-drafted with clear requisites, it is valuable for a business in keeping their employees and protecting its confidential information. On the other hand, they can also be too restrictive and therefore useless.
When a Non-Compete Agreement is Enforceable by the Employer
As long as a non-compete is written well, and serves the interests of the employer but not broader than necessary, the agreement is enforceable. Many myths have come about regarding non-compete agreements, and it is much better to be safe and sure about any agreement you are signing as an employee.
A Non-Compete Agreement That is Too Restrictive
Some non-compete agreements are very restrictive. This can mean either the state will limit its enforceability or if fully enforced, the employee may find it almost impossible to get work after leaving that job. A non-compete agreement can stop a person from working in the same industry that he just left. This can mean that after years of education and learning skills, he or she can’t find a similar job with comparable pay. Without properly written and phrased non-competes, professionals won’t be able to freely find work, or be able to change employers when they need to.
When Courts Won’t Enforce a Non-Compete Clause for the Employer
Whenever a non-compete is signed, there has to be something of value given to the employee in exchange for signing. An exchange of value for a newly hired employee is typically that he is being hired for the job. For employees who have already been hired, some other consideration of value must be made or the non-compete can’t be enforced. The courts also won’t enforce an agreement when it restricts the competition for too long a period. Usually a 6- month period is considered normal. This could vary from business to business. The courts may not enforce a non-compete agreement if it restricts someone from working in a large territory. Often the towns, counties or cities are listed but if too wide an area, it would be unfair and therefore not enforceable.
Does it Make Sense to Obtain Legal Counsel for a Non-Compete Clause?
When asked to sign a non-compete agreement, it is wise to have a contract attorney look it over and determine if it needs to be changed or even not signed at all. You are in danger of restricting future employment when not having legal counsel protect you.
Why You Should Not Sign a Non-Compete Clause
Many ask why you should not sign a non-compete agreement? A non-compete agreement is an agreement between an employer and an employee in contract form. It prohibits the employee, upon leaving the current job, from working in a business that would compete with the current employer.
Disputes over a Non-Compete Agreement
Disputing a non-compete agreement in court can be difficult since many courts don’t approve of these types of agreements. If the agreement is reasonable, however, the court might uphold it. So as not to end up disputing the agreement, at the time you are presented it, you should agree only to what is necessary to reasonably protect the employer and to get paid for the duration of the non-compete.
To Get Employment and More Pay But Cannot Compete
When you are being hired by someone in a state that does not prohibit non-compete agreements, you can be required to sign one in order to get the job. If you don’t sign, you likely will not get the job. But that doesn’t mean you have to just blindly sign whatever is put in front of you. When you have one before you that seems unreasonable, you can simply attempt to negotiate for something less restrictive.
The Legality of an Employer Non-Compete
Not all states accept any non-compete agreements as legal. Oklahoma is one state who refuses to enforce them. California states it is illegal for an employer to even ask an employee to sign one.
Deciding Whether or Not to Sign a Non-Compete Clause
You need to make the decision on whether or not to sign a non-compete agreement. You definitely should not sign one that extends for a long time and covers a wide regional area. This would make it impossible to find work once leaving the current employer. The non-compete needs to be reasonable. You’ll need to watch for it among the stack of papers you are given to sign when starting employment. It is not always possible to foresee every circumstance and that is why it is smart to have a contract attorney look over any non-compete agreement. They can ensure that all is aboveboard and you will not be taken advantage of.
Breaking a Physician Contract with a Non-Compete
Physicians with non compete clauses in their contract were originally considered as restraints of trade, and thus were invalid on the grounds of public policy at common law; however, many restraints of trade incident to contracts were upheld based on the rule of reason. Thus, restrictive covenants between dentists not to compete after termination of employment are generally enforceable as long as it is reasonable.
However, there are a few states which prohibit non compete clauses. Please review your state laws for non compete rules and regulations to see what the specific rules for your state are. The general test for reasonableness of these clauses hold that on termination of employment, a covenant which restrains an employee from competing with his former employer is termed reasonable if:
- The restraint is not more than required for protecting the employer,
- It does not inflict any untold of hardships to the employer, and
- The restraint is not injurious to the public.
Reviews of Non-Compete Reasonableness
For instance, in Ohio, a non-competition clause was considered unreasonable after judicial review when it was noted that a provider’s sub-specialty was uncommon, and that it would be harsh if the restrictive covenant was enforced as the hospital where he was precluded from practicing was only one of the few institutions in the area where he could practice his specialty.
Thus, in Ohio, covenants restraining providers from competing with his employer on termination of employment is considered unreasonable if it inflicts hardship on the doctor, is injurious to the public, if the demand for the doctor’s medical expertise is important for the community people and if the doctor’s services are important for the health, care and treatment of public. However, non-competition clauses for doctors, in general, are enforceable as long as they protect some of the employer’s legitimate interests. Having a non-compete review by a lawyer can assist in avoiding legal issues.
What Happens When You Break a Noncompetition Clause?
So, what happens when you break a non compete agreement? Non-compete agreements is a contract that is between an employer and an employee. The signed agreement states that the employee agrees that he or she will not enter into a competition with the employer, either during the time of employment or afterwards. It prevents employees from entering professions or markets that are in direct competition with the employer.
Breaking the Non-Compete Agreement
There are a number of things that may happen if an employee does violate or breach non-compete agreements. It can also be that nothing happens for the violation. It seems that non-compete agreements are not looked upon favorably by the courts in most states. Due to this, you would want to ensure any non-compete agreement insisted upon by an employer be legally valid and enforceable under the laws of the state.
Legally Valid Noncompete Agreements for Your Job
When you violate a legally valid agreement, it can cost you money. The employer can file a lawsuit against you and ask for money damages and you may have to pay your former employer. The employer can also ask for an injunction, which will force to you stop the violations due to breach of contract. Factually, the employer can also file a suit against your new employer. In this case, you will probably end up being fired from that job so that new employer can avoid litigation.
Not Having Consequences from Breaking Agreements
At times there is no action taken when you violate a non-compete agreement, and this would be when the employer would rather not go to the trouble of taking legal actions against you. Also if the agreement isn’t binding, it is possible you won’t suffer consequences.
They Need to Consult an Attorney
It is important to have an attorney check your non-compete agreement prior to signing it. You want to ensure it is enforceable and binding. You also want to be sure you understand what the non-compete agreement is asking of you. They can be so restrictive that you wouldn’t want to sign it at all. Once reviewed by a contract attorney, you will know whether or not it is a wise idea to sign it and protect yourself for any future work.
Non-Compete Agreement Attorney
When your PA agreement is reviewed by an experienced attorney, you will find financial benefits which end up outweighing the cost of the review. Leave it to the experts. If you are in need of assistance with an employment agreement or contract review schedule a Non-Compete Agreement Lawyer with Chelle Law today!