For many new employees, one of the first documents they’re asked to sign is a non-compete contract, promising not to work for a competitor for a specified length of time. But the company is free to require an employee to sign the non-compete at any time during their employment, even if the employee has been there for several years. It’s completely legal, and it can be a condition of employment at the company.
There are instances where a non-compete contract can be challengeable in a court of law however. If a company asks a single employee to sign a non-compete with the intention of firing them right afterward without informing the employee, this could be considered fraudulent abuse. It is a questionable case involving misrepresentation, and should be discussed with an employment law attorney. However, if management had everyone at the company sign one and then fire people shortly after, the non-compete would still be enforceable.
Non-compete contracts do have limitations though. A non-compete contract involves two aspects: time and geographic location. Most non-competes last six months to one year. Two years would probably be considered the longest acceptable duration. A four or five year non-compete could easily be fought in a court of law, and past cases have resulted in something called a blue pencil revision, where a judge can literally take a blue pencil and scratch out the five year time, and pencil in two years.
When it comes to geography, 50 – 100 miles of the company’s location is considered reasonable, although technology is shrinking the world and making competition global. Given this, I think a worldwide non-compete contract may one day be considered reasonable.
In the meantime, if you’ve been asked to sign a non-compete that you believe is too long or too restrictive, you may want to speak with an employment attorney. For more information, please contact the Cassis Law Office at (502) 736-8100.
Photo credit: Wikipedia/Wikimedia Commons (Creative Commons)