Noncompete Agreements

Executives, sales/marketing people, and information technology experts, among others, are often asked to sign non-competition and non-solicitation agreements prior to accepting a job or upon receiving a promotion. Senior executives are also often offered specialized executive compensation agreements which include similar clauses.

Close-up of business people negotiating a contract, working with documents at desk and signing contract

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Employer Business Protection

Non-competition/non-solicitation agreements are used to protect the employer’s business relationships and information at the end of an employment relationship. These agreements are governed by state law, so there is quite a variation in the approach by different states. In most states, non-competition/non-solicitation agreements are allowed but viewed with suspicion by the courts. In California, North Dakota, and Oklahoma they are not allowed in the employment context at all, but can be used in other circumstances, such as the sale of a business or dissolution of a partnership.

If you have been offered an employment contract with a non-competition agreement included, or offered a separate non-competition agreement, be aware that they often include restrictive clauses such as:

  • Overly broad definition of the geographic “market area;”

  • Overly broad product or service descriptions of the “product market;”

  • Too long of a term;

  • Mis-statement/exaggeration of your position or geographical area;

  • Attaching a customer list which includes customers you do not service and/or products/services you do not sell;

  • Overbroad confidentiality provisions;

  • Mandatory arbitration of disputes instead of court resolution;

  • Strict limits on your ability to contact colleagues after the employment comes to an end (“non-solicitation” clauses).

These clauses can be quite limiting and, unfortunately, surprising to an employee if they are fired/terminated, laid off, furloughed, offered severance, etc. Non-competition agreements must therefore be carefully considered in advance of signing, and certainly not ignored because human resources and/or your supervisor is in a hurry to get it signed.

The lawyers at Pelton Graham can review the proposed non-competition agreement and assist you in negotiating fair and clear terms in advance of signing.

Young woman meeting new boss in his office, he is holding a noncompete agreement and giving explanations

Unfair Enforcement

If you already have a non-competition agreement and your employer is unfairly enforcing it, you should consult with one of the experienced employment lawyers at Pelton Graham. We will evaluate your case and discuss what relief you can seek. In particular, there are a number of state laws and court decisions limiting an employer’s ability to enforce non-competition agreements, especially in California.

The relief you normally seek if you have a non-competition agreement that is being unfairly enforced is to be relieved from its terms. Damages are usually not the issue, as they are in other types of cases. Because of this, we will also discuss all the facts about your employment to see if you have other claims which might lead to a damage award.

We’re Here to Help

If you are concerned about an unfair non-competition/non-solicitation agreement, especially if it affects a number of employees in the same situation, you should act promptly to seek advice. This is important both in order to stop the unfair activity, and because employment protection laws have strict filing deadlines which could bar your claim. Pelton Graham is here to help.

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