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Key factors when assessing a non-competition agreement

An employment contract can cover a lot of issues. Compensation, hours, and length of employment are often addressed, but so, too, are issues regarding supplemental employment and confidentiality. These matters can often be drawn into question when a business relationship sours, which can lead to contentious litigation. While most of these issues come up at the time of employment or upon termination, there are contractual issues that may come up well after an individual has left the employer with which they had the contract.

Oftentimes, one of these issues is a non-competition agreement. These agreements essentially say that an employee cannot work for an employer's competitor for a specific period of time after employment with the contracting party ends. The purpose of such agreements is to protect a company's secrets, practices, and strategies. However, these contracts can also severely limit a former employee's ability to find other employment after leaving the company with which they had a contract, which is where conflict can arise.

When legal action is taken regarding a non-competition agreement, a court will often look at three elements to see if the agreement is valid. First, the court will consider whether there was consideration given in exchange for the employee's agreement not to compete. Second, the court will assess whether a legitimate business interest was protected by the agreement. Lastly, the court will consider whether the agreement was reasonable on all fronts, including the length of time it encompassed, the geography where competing employment was restricted, and the general scope of the agreement.

Successfully addressing an invalid non-competition agreement can be key to an individual's future. Failing to do so could significantly reduce one's income and future prospects. Therefore, those who are facing employment law issues, including those involving a restrictive noncompetition clause, should think about whether acquiring legal assistance would benefit them.

Source: FindLaw, "Non-Competition Agreements: Overview," accessed on May 27, 2017