If you have been looking for a job recently, your employer may have asked you to sign a noncompetition agreement before it agrees to hire you. Employers may also do the same as a condition of continued employment or before you may receive a bonus or other benefits. A noncompetition agreement (“non-compete”) is a contract that limits your ability to work for a competitor in the event of your termination or resignation.
In the past, non-competes were mainly limited to top managers and other key employees, in order to prevent them from disclosing trade secrets and other inside technical knowledge to competitors. However, nowadays, they are more common than ever. A recent study estimates that non-competes now cover 18 percent of the overall workforce, including 15 percent of workers without a college degree and 14 percent of those earning less than $40,000 per year.
In a particularly noteworthy example of this phenomenon, the national sandwich chain Jimmy John’s was recently a subject of many news stories, as it required its employees to sign non-competes banning them for two years from working for businesses that derive 10 percent or more of their revenues from the sale of sandwiches. The chain recently announced that it would discontinue this practice.
To protect lower-wage workers from being subjected to non-competes in the future, Congress is currently considering several bills that would bar non-competes for workers earning less than $15 per hour. However, as the passage of these bills seems unlikely, it is more important than ever to be careful before signing a non-compete.
Non-competes in New York
Although a non-compete agreement may seem fair at the time you enter into it, it can cause you to suffer undesirable effects such as lower wages (since you cannot go work for a competitor, there is little motivation for the employer to give you a raise) and fewer opportunities to develop your career.
If you have signed a non-compete agreement, you may think that you are locked into its terms. However, this may not necessarily be the case. In general, New York law disfavors the use of non-compete agreements, as it views them as unreasonable restraints on trade. However, New York courts will enforce most non-compete agreements in most industries if their restrictions are reasonable. Generally, a non-compete may be considered unreasonable if:
· It imposes an undue hardship on you
· The restrictions are greater than is needed to protect your employer’s trade secrets and other protectable interests
· It is unreasonable in geographic scope or duration
· It causes injury to the public
Whether a given non-compete is reasonable is a very complicated question that is determined based on the facts and circumstances of your case. As a result, it is important to seek out legal assistance-ideally, before you sign the non-compete. The experienced employment law attorneys at Serrins Fisher LLP can review the agreement and advise you further on your rights and the legal remedies at your disposal.