Non-compete agreements are becoming an increasingly popular way for employers to try to limit employees and former employees from working for a competitor, or from divulging trade secrets or other proprietary data.

Contrary to common misperceptions, courts will uphold non-compete clauses if they comply with acceptable standards. Enforcement against an employee can be both by damages and by an injunction that prohibits the employee from engaging in conduct that violates a non-compete clause.

An employer also can be held liable for hiring an employee who violates a non-compete agreement with a previous employer. In some cases, employers can recover damages from both the former employees and their new employers who collaborate with them in the transgressions.

However, some states impose substantial restrictions on the enforceability of non-compete clauses. In California, for example, they may not be enforceable at all. In New York, their enforceability is quite limited.

Most non-compete agreements are entered into with little, if any, negotiation between the employer and the employee. They usually are signed at the outset of an employment relationship where the employee may have very little bargaining power and when the employee is generally not too concerned about limitations on future employability when beginning a new job.

But when an employee decides to leave a job, the non-compete agreement may be a significant impediment to future employment or may prevent employees from becoming self-employed.

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