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Non-compete agreements: Valid protections or unfair restraints?

On Behalf of | Sep 13, 2021 | Business Law Litigation

When an employer hires an employee following an exhaustive search, they invest in their experience and skills. They are hopeful that the new staff member significantly contributes to their bottom line as they have with previous employers.

Naturally, employers want their investment to pay off. Many take proactive steps to protect their acquisitions. Oftentimes, that takes the form of non-compete agreements.

The two sides of non-competes

Non-compete agreements are an essential part of an employment contract, particularly popular with companies in the business of sales and recruiting. The new hire signs the pact, effectively agreeing that they won’t work in a similar profession or trade in the future that directly competes with their previous employer.

A recent study revealed that 20 percent of employees in 2014 were subject to these agreements.

Non-competes are legally binding, provided that the contract has reasonable limitations when it comes to locality and time. Those with more significant geographical or time spans are often considered unfair and an outright restraint of trade.

For employers, non-competes protect their investments. For employees, the agreements limit job options. While they want to continue their career with a new company that happens to be in the same industry as their previous employer, they should understand that certain restrictions apply.

Detractors see non-competes as highly restrictive agreements that limit options that employees have should they want to pursue new job opportunities in a similar industry. Proponents see value in protecting companies who hired employees who may have moved up the ladder, only to suddenly or secretly jump to a competitor, potentially losing resources and market share.

Non-compete agreements are high-stakes pacts that could damage an employer’s bottom line and hinder an employee’s career progression. Legal complexities require the help of an experienced and knowledgeable attorney.

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