Key Harrington Barnes, PC

Are Noncompete Agreements Enforceable?

Many businesses force employees to sign noncompete agreements, only to learn later that the agreement does not hold up in court. The reality is that judges look very closely at these agreements when they are at the center of a dispute between an employer and former employee, and they may disapprove of agreements that unfairly hinder a former employee's right to earn a living. For this reason, employers must be diligent in the drafting and signing of these agreements to ensure they are enforceable.

Employers Have The Right To Protect Their Interests

Intellectual property is often one of the key features that gives a business an advantage in a competitive landscape. It only makes sense to protect it. However, when  employers go to far in trying to protect themselves from competition, they may actually lose out on the protections they truly need.

One of the most common problems with noncompete agreements is unreasonableness in scope and duration. If they attempt to prevent a former employee from working in a place where the business does not even have a presence, or if they attempt to stretch to a time frame in which intellectual property will likely no longer hold value, that may jeopardize the actual strength of the agreement.

Even the manner and time when the noncompete agreement is presented to the employee to be signed is important. There must be what is referred to as valid consideration for signing the agreement. In other words, the employee must be offered something of value in exchange for the rights being signed away. Typically, the something of value is the job itself. However, if the employee is already employed at the time of signing, what will the employee be getting out of it?

As in all contractual matters, attention to detail is absolutely critical. A single line can mean the difference between a contract that is enforceable and one that is worthless, so businesses must be careful with these documents.