A recent article in the Albany Times Union discussed increasing scrutiny of non-compete agreements in the workplace—particularly those applied to what would generally be considered “lower level” employees.
What Is a Non-Compete Agreement?
By way of background, non-competition agreements, or “non-competes”, have been around for quite some time. They are typically provided to an employee at the start of his or her employment, as a condition of their employment. By signing the non-compete the employee agrees that he or she will not, for a period of time after termination of employment, work in a “competing” business.
Non-competes were traditionally used as a way for larger companies to prevent their senior level or highly skilled employees from taking what they had learned and selling their service to the highest bidder. In other words, it was meant to prevent employees from obtaining high level training and information and moving on to another company—which would in turn benefit from the information.
Increased Popularity Had Led to Increased Scrutiny for Non-Competes
In recent years, however, there has been what most would consider to be a broad expansion in the use of non-compete agreements, and they are now popping up with lower level employees who rarely have access to any information that would harm the employer if shared or used by a competitor. This has increased the level of scrutiny that these agreements now face.
Courts have, generally speaking, never been enamoured with non-compete agreements. Traditionally, courts have seemed to view these agreements as restricting an individual's ability to go out and earn a living, so it was generally understood that such agreements should be very narrowly written to allow them to withstand legal scrutiny.
Generally courts will enforce a non-compete agreement that is limited in “scope and duration,” meaning that the time of the non-compete period is relatively short, and the geographic area that it covers is relatively limited. So, for example, an agreement that says that a former employee cannot work for any other employer in the country for five years will, in all likelihood, be found to be legally unenforceable. It is also likely that courts will subject agreements relating to lower level employees to even more scrutiny.
The lesson here is twofold: first, employers who wish to have employees sign non-compete agreements must be sure that the agreements are sufficiently limited so as to likely be enforceable&mdashl;practically if the agreement is obviously unenforceable it has no “teeth”; and second, employees who are provided with non-c-mpete agreements to sign, or those who are seeking to avoid enforcement, should be aware of -the legal restrictions imposed on such agreements, as well as the potential damages that they could be subjected to in the event the agreement were enforced.
If you have questions about a non-compete agreement feel free to give us a call at 888-706-9765 or 518-308-8339. We have years of experience practicing employment law, and are proud to serve Saratoga Springs, Albany, and all of New York.
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Representing plaintiffs in employment and serious injury matters.