Non-compete agreements are legal documents commonly used by employers to protect their business interests. These agreements typically prohibit current and former employees from working for competitors or starting their own competing businesses for a specified period of time. While non-compete agreements are legally binding, there are several defenses that employees can use to challenge their enforceability.
1. Overbroad Restrictions
One of the most common defenses to non-compete agreements is that the restrictions are too broad. Non-compete agreements must be reasonable and necessary to protect the employer`s legitimate business interests. If the restrictions go beyond what is necessary to protect those interests, the agreement may be deemed unenforceable.
For example, if a non-compete agreement prohibits an engineer from working in any capacity for a competing company, including in a non-engineering role, the restriction may be considered overbroad. Similarly, if the non-compete agreement prohibits the employee from working for any company in the same industry, regardless of whether it competes with the employer, the restriction may also be considered overbroad.
2. Lack of Consideration
Non-compete agreements must be supported by consideration, which means that the employee must receive something in exchange for signing the agreement. Consideration may include a signing bonus, a raise, or continued employment. If the employee did not receive any consideration for signing the non-compete agreement, the agreement may be deemed unenforceable.
3. Unreasonable Duration
Non-compete agreements must also have a reasonable duration. The duration of the agreement should be no longer than necessary to protect the employer`s legitimate business interests. For example, a non-compete agreement prohibiting an employee from working in the same industry for 10 years may be considered unreasonable and unenforceable.
4. Scope of Geography
Non-compete agreements should also be limited to a specific geographic area. If the agreement prohibits an employee from working in any location, regardless of how far it is from the employer`s business, the restriction may be deemed overbroad. Similarly, if the non-compete agreement prohibits the employee from working in a specific state without a legitimate business reason, the agreement may also be considered overbroad.
5. Public Interest
Finally, employees can argue that enforcing the non-compete agreement would be against the public interest. Non-compete agreements can prevent employees from using their skills and knowledge in their chosen profession, which can impact their ability to earn a living. If the harm to the employee outweighs the employer`s interest in enforcing the non-compete agreement, a court may refuse to enforce the agreement.
In conclusion, while non-compete agreements are legally enforceable, they must be reasonable and necessary to protect the employer`s legitimate business interests. Employees have several defenses available to challenge the enforceability of non-compete agreements, including overbroad restrictions, lack of consideration, unreasonable duration, scope of geography, and public interest. If you are faced with a non-compete agreement, it is important to seek the advice of an experienced employment attorney to determine your rights and options.