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Sign, Negotiate, or Walk Away
By Steen James Brown, Esq.
You’ve been offered a new job. Your prospective employer wants you to sign a non-compete agreement, or your old employer had you sign a non-compete that you know want to break. What should you do?
Non-compete agreements are designed to protect businesses by preventing departing employees from working for the employer’s competitors. Understandably, businesses do not want to invest time and money developing employees’ skills only to later face those employees as direct competitors. Likewise, employees do not want to be barred from starting their own businesses or taking new jobs that require those hard-earned skills.
Employees often feel they have no choice but to sign, and the question becomes “Can the non-compete agreement be enforced?” The answer is: “it depends.”
Most states’ laws reflect a public policy that fair competition is desirable and should not be obstructed by non-compete agreements without good cause. At one extreme, California prohibits enforcement of almost all non-compete. Other states such as Virginia and Tennessee “disfavor” non-competes. These “disfavoring” states generally allow enforcement of a non-compete only if the agreement is reasonable as to duration and geographic area. These states also require agreements to be carefully tailored to protect legitimate business interests without imposing excessive hardship on the employee.
Still other states are more favorable toward upholding the agreements. Florida, for example, does not consider the resulting hardship on an employee who is likely to make unfair use of trade secrets, other confidential information, specialized employer provided training, or critical relationships that were developed at the employer’s expense.
Tips for employers: Have your non-compete agreement drafted by an attorney who is familiar with the laws of the state in which you operate. Discuss with your attorney the advisability of paying a separate signing bonus to improve your chances for voluntary compliance and enforcement.
Tips for employees: Before signing or defying a non-compete, have your agreement reviewed by a knowledgeable attorney; be sure your attorney explains the consequences of signing or defying, including the costs of defending against a lawsuit; and consider negotiating for a more favorable agreement, a larger bonus, or higher salary in return for signing away your future rights.
Steen James Brown is an attorney licensed in Florida. This article is published for the purpose of providing a general misunderstanding of the law and is not a substitute for individual legal consultation.