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A non-compete agreement or non-competition covenant, is an agreement that imposes trade or work restrictions on an individual or business no longer associated with the entity attempting to enforce the agreement. Non-compete agreements are more common today than at any time in history. They have become standard operation procedure for companies both large and small. Companies use them to protect their interests in a number of important ways. The two most common are:
If you’re an employee who has been recently asked to sign a non-compete… Or, if you’re an employee looking to end a relationship with a company where a non-compete has already been executed and you’re not sure what your rights are… Or, if you’re a company that needs assistance drafting and constructing fair and balanced non-compete agreements, we can help. The law offices of Joseph H. Ostad, P.A has been helping employees and employers with non-compete agreements for more than 20 years. We understand both sides of the law and will do everything in our power to help our client’s best interests.
Non-compete agreements vary from one situation to another. And often companies over-reach when drafting their non-compete language. This creates confusion and gray-areas that an experienced attorney can recognize quickly. Here are some important questions we can help you resolve:
When it comes to litigation, courts often closely scrutinize non-competition agreements. From their prospective a company needs to protect their trade secrets but a former employee also needs to retain their ability to earn a living. Here is a broad outline of what courts look for when enforcing or overturning non-compete agreements and non-competition covenants:
In order for a non-compete contract to be legitimate, the bound party must be given due “consideration” in exchange for the promise not to work for a competitor or utilize company trade secrets and knowledge. The enforcements of considerations vary from state to state. Often a salary is sufficient. However, some states require greater due consideration which may include an additional payment of money.
The interests being protected by an employer must be of sufficient value to warrant a restriction of freedom on an individual or business. For example, a legitimate non-compete agreement would be one that prevents a salesman from persuading his clients and customers to follow them to a direct competitor. Such a situation could be detrimental to a businesses bottom line — even survival in some cases. This would be especially true if a “senior” salesperson, one with a large customer base, goes to work for a competitor and attempts to take his client/customer base with him.
A non-compete agreement must indicate a reasonable enforcement date for the restrictions. For example, in the case of a salesman leaving one company to work for a competitor, the non-compete agreement cannot be valid for the rest of that persons career. It must be a “reasonable” amount of time. “Reasonable” is subjective and the law on this can vary from state to state.
Non-compete restraints can often be bound by limits in geography. For example, it would be considered reasonable to restrict a salesman for working for a competitor in the same county, district or even state. But it would be unreasonable to restrict that same salesman from working in the same capacity 1,000 miles away, even if the two companies offer similar products. Again, geographic limitations vary by state and there is sufficient gray area in covenants that makes an experienced non-compete attorney essential.
Courts want to protect the rights of businesses to keep proprietary secrets. But restrictions shouldn’t be so severe that they cause a person to be forced out of their career or profession.
The restrictions placed on employees and businesses should never interfere with the public interest.
In short, there is a fine line between a non-compete agreement that protects a legitimate business interest, and one that is considered reasonable and fair to the employees who sign it. An experienced non-compete agreement lawyer can ensure there is a mutual balance. So, while an employer has a legitimate interest in preventing employees from stealing or taking advantage of skills, secrets and customers procured under contract, employees have the right to negotiate non-competes while making sure that their ability to find work in the future is never hampered.
When it comes to non-compete agreements, experience matters most. The law offices of Joseph H. Ostad, P.A. have been helping employees and employers with non-compete negotiation, formation and claims for more than 20 years. We’ll handle each step of the process professionally and quickly. We’ll work hard to protect your rights. Please contact us today for a free consultation. You can call 800-320-0080 and talk to us directly or click here to contact us online.