Should You Have an Attorney Review Your Noncompete Agreement?

Noncompete agreements are designed to protect employers from unfair competition and leaking of private company information. However, there is a line of employee freedom that should not be crossed by these agreements. You are not legally required to sign these agreements, but the employer has the right to not hire or fire you for not signing it depending on your state’s laws and the reasonability of the agreement. There are several factors that determine if the agreement will hold up in court.

Factors for Determining Noncompete Agreement Legitimacy:

1. Interest: Is the agreement serving to protect something legitimately important in regards to the company’s wellbeing? Are there trade secrets or important assets at stake?
2. Scope: How far of a geographic range is covered by the agreement? Will this be too much of a constraint on the employee in finding new work?
3. Time: Are the length of the restrictions reasonable?
4. Range of Restriction: Are jobs that are different from what you were doing restricted by this agreement?
5. Incentives: Were you offered a bonus or additional benefits from the employer when you signed the agreement?

For example, if you worked at Jon’s lawn services in Texas, and signed an agreement that said you couldn’t mow any other lawns in the state for the next 3 years if you quit, that may be determined to be too harsh. This was the case in New York with Jimmy John’s noncompete clause, requiring employees to not work at other sandwich restaurants for the next two years. The court overruled this agreement.

If incentives were accepted by signing the agreement and the scope of the terms specified are reasonable considering the factors above, the case is more likely to be upheld as legitimate. If you have already signed an agreement and are having second thoughts, there are still plenty of options for you. If you are fired after signing, the terms may or may not apply depending on the reason for firing and how firing is addressed in the terms. Every state has different laws with how stringent they are with upholding these agreements and determining how legitimate the contract is. In 2016 legislature was enacted limiting non-compete power in multiple states and the trend is continuing this year. Contact Daniel A. Atkerson if you want to know how noncompete clauses are handled in the state of Texas.

Before signing, make sure you protect yourself by analyzing the agreement using the factors listed above, and if you have any stories to share in regards to this topic, please tell us on our Twitter and Facebook pages and keep following our Dallas employment law attorney based attorney on this blog.