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Remember how thankful you were when you started your job? So glad just to be employed? You would have signed anything…and you probably did without necessarily reading all of it. Okay, so you’re human. But now that you want/need a new job, that non-compete agreement you signed might be making you sweat. Fear not! There are 3 key things to know to can reduce your chances of being sued or unemployed for years:
These agreements were originally designed to prevent the leaking of sensitive trade secrets, as well as protecting a company’s investments. This could include everything from client information to marketing strategies and they are strictly in the employers’ interest – not yours. Here’s the good news: it’s public policy that every individual has a right to earn a living. There was something in the Declaration of Independence about the pursuit of happiness that implies it – and U.S. law loathes contracts that inhibit competition. Contracts put out by corporations that hinder your employment in any way do not stand up well in court – not to say they never get there. They do. Frequently. And employees incur the litigation costs, warns Kurt R. Klaus, who practices media sector law in D.C.
Judges will also look at whether or not the terms affect your livelihood, which in this economy is easy to do, as well as whether or not the company will seriously incur a lot of damages if you leave, says Klaus. The geographic scope of the agreement could also be too limiting in the eyes of the court. If you work for a national company, does it prevent you from working anywhere else in the nation for someone that might be a competitor? If so, the contract is likely too broad and the courts will side with you.
“An employee of a jingle company wanted to leave to work at another jingle company, but their client list was national,” Klaus explains. “We were able to prove that due to the frequency of turnover in her position, the length of the non-compete was unreasonable.” Basically, this woman couldn’t work anywhere in the nation if the contract held true. “If they want to hold her to it for that long, they should pay her,” he stated. The employer ended up releasing her from the agreement.
Each state handles these contracts differently. California has virtually outlawed them, according to NOLO (http://www.nolo.com/legal-encyclopedia/free-books/employee-rights-book/chapter10-8.html). Florida attorney Carol Swanson explains that their statutes presume a two year period for non-competition is “reasonable.” She also notes that “two years without work will devastate most people’s finances.” Some states try to write multi-state provisions into their agreements, but the courts don’t have to uphold them.
Timing is another thing to consider. If you happen to be switching jobs just as your company has merged/is merging, and you want out of your non-compete agreement, keep this in mind: the company is obligated to keep a note of pending or potential legal action on their books, which are accessible to the other company during due diligence. In other words, a company may be more likely to let you out of your non-compete agreement, or at least negotiate it, to prevent even a threat of legal action.
It’s also possible that some of the terms of the agreement don’t apply to you. If you work in a lower level position that is not privy to super secret information, many of the terms in your agreement refer to information you were never privy to. Klaus has negotiated for and against non-competes. “It’s less of an issue for people not in key positions,” he says. “If you don’t have access to key information you can go to your company and see if they will be reasonable.”
If you did have access to key information, but would like to leave your position for a better one in less time than your agreement allows, find out if you have any leverage. For example, find out if you can either reduce the terms or increase your pay. “You can also agree to sign a confidentiality agreement if you want to leave your non-compete early, but don’t want to get sued,” says Klaus. “If there’s a client list involved, a reasonable company might be willing to sign a separate non-disclosure agreement stating that you wouldn’t disclose that list.”
We’re not saying don’t sweat it entirely – be smart about it. If you are looking for your next job or taking on a secondary job, you might want to go back and read (please tell me you kept a copy of) what you signed. Just be informed about your particular situation. “Unfortunately, employees are putting themselves at risk if they do not get all of these employee contracts reviewed by an employment attorney before they sign them,” says Swanson. “And that includes top managers right down to garage mechanics.”
* I’m not a lawyer and I don’t play one on TV, so you’re not allowed to take this article as legal advice, okay?
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