Non-Compete Contracts Text Size:

Employers are using non-compete agreements with their employees in greater numbers than they used to. These agreements prevent present and former employees from working with competitors. They also limit the chance that private employer information or trade secrets are given to another company.

Enforceability

As long as non-compete clauses in employment contracts meet acceptable standards, courts will generally uphold them. Employees may face legal penalties if they violate a non-compete clause. These penalties include money damages or an injunction that prevents further violations.

Along with the violating employee, the company that hires her may also face penalties. Any company that helps an employee violate a non-compete clause may have to pay damages. Courts don't want companies to prosper from breaches of contracts. Many states don't favor non-compete clauses. They impose restrictions on when they can be used. New York is a state that limits enforceability. Some states, such as California, are very strict and may not enforce a non-compete clause at all.

There are several reasons why states may not favor non-compete clauses. Employment contracts are entered into at the start of the relationship between the employee and the employer. Employers have most of the power. Employees have very little leverage to negotiate or bargain for a contract without a non-compete clause.

It's also difficult for an employee to think about future employment when she starts a new job. She's usually concentrating on making a good start with her current employer. Non-compete clauses make it difficult for employees to gain future employment or become self-employed.

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