E43: Season 4 Episode 8 – Non Compete Advice & Tips
Defining Non-Competition Agreements
A non-compete agreement is loosely defined as a signed contract or covenant that would restrict one of the parties from doing something they would normally be able to do. For example, in an employer/employee situation it can be a salon worker signs a no-compete agreement that in the event they no longer work at the current salon, they cannot go work for the direct competition salon(s) defined in the signed contract for a defined period of time. It is generally hard to enforce these contracts, unless they further a legitimate business interest, which is a broad and vague statement. There is generally a time period placed on theses restrictions, as well as a geographical area where these clauses are valid. To be enforceable these non-compete agreements need to not be too oppressive on the employees and show legitimate protection of the employer.
COVID & Enforcing These Clauses
These contracts are hard to enforce even in the best of times, but with courts closed across the country, except for in cases of emergencies, that adds another layer of difficulty when it comes to bringing a non-compete case to court. Unfortunately due to COVID, many employees have been laid-off across different sectors, which make the non-competes less easy to enforce. Some states, for example New York will not enforce non-competes in this instance, but other states need those circumstances written in specifically. There are two specific perspectives when it comes to non-competes, the employer side and the employee side. To be able to enforce these contracts, especially in the time of COVID, there are three main factors to consider as an employer. Factor one is you need to be able to show that you will most likely win based on the merit of the argument, factor two is you need to prove irreparable harm, and lastly you need to come to conclusion on what other damages need to be brought up. Like we stated before, most of these contracts have a time period on them, so acting fast is extremely important, considering the backlog in court systems currently.
Anti-Trust Criminal Statute Enforcement
The FTC and Department of Justice released a joint statement in April 2020 to make their intent known; their intent is stronger enforcement of anti-trust statutes against large corporations. Basically stating, that corporations within the same sector cannot make anti-poaching agreements that would interfere with employees abilities to move around and work where they like. So companies should not be taking any action in their personal business interests at the expense of the well being of the public. These tie in to the non-compete agreements between an employer and employee, but in this case these agreements are made between two or more companies, which makes restrictions on employees even tighter.
Tom Dunlap: Linkedin
David Ludwig: Linkedin
Ben Barlow: Linkedin