Non-compete agreements are growing increasingly common in Colorado and the rest of the country. From an employer’s standpoint, non-compete agreements are aimed at managing the risks that are inherent to an employee’s job change.
Because few employer-employee relationships last forever, there must be a way to sever the relationship while minimizing the risks for both parties. For the business, these risks are heightened if an employee should decide to work for a competing business in a similar geography.
While non-compete agreements were once mainly used in the technology, sales and corporate worlds only, a recent article from The New York Times reports that many other fields are now making use out of the contracts as well.
“There has been a definite, significant rise in the use of non-competes, and not only for high tech, not only for high-skilled knowledge positions,” a professor at the University of San Diego School of Law and expert on non-compete agreements told the Times.
“They’ve become pervasive and standard in many service industries,” the professor said.
Employees ranging from yoga instructors to social media marketers to camp counselors are being asked to sign contracts limiting the job options they can pursue after their current employer-employee relationship ends.
However, as the Times article pointed out, not all non-competes are created equally, and they must comply with the law in order to be upheld in court. Current law governing non-compete agreements varies from state-to-state.
Only a couple states (California and North Dakota) ban non-compete agreements outright, while there are others like Texas that place few limitations on their scope.
A professor at New York University School of Law told the Times that most states require there to be a “legitimate business interest” that is “narrowly tailored and reasonable in scope and duration” in order for the non-compete agreement to be valid.
Terms like “legitimate business interest,” “narrowly tailored,” and “reasonable scope and duration” can be quite confusing to the average employer or employee, which is why it is so important to consult an experienced business law attorney before asking an employee to sign a non-compete agreement or signing one yourself.
Source: The New York Times, “Noncompete Clauses Increasingly Pop Up in Array of Jobs,” Steven Greenhouse, June 8, 2014