Being competitive is not always good. For example, if you always get mad when your friends do better than you in a game of Monopoly, you are probably not much fun to play board games with; you should probably stick to parlor games where the goal is not to win. By contrast, when a prospective employer tells you that your application is competitive, it is a good sign. The employer might not decide to hire you, but at least they noticed your application and considered it.
When you attend orientation for a new job, or especially when you have already been working for your employer for a while, and your employer convenes a meeting about a new project, your employer might talk about the market niche that the new project aims to fill. The presenter might talk about who the main competitors are in this market niche and what your company is planning to do to compete with them. If your role involves marketing products, then pricing them competitively so that consumers or business clients will be able to buy them is always one of your goals. You might be surprised, then, when an employer tells you not to compete, and even makes you sign a document where you promise that you will not compete with your employer.
The Boulder non-competes lawyers at HKM Employment Attorneys LLP can help you decide whether to sign a non-compete agreement, and they can help you renegotiate its terms or resolve disputes related to a non-compete agreement that you already signed.
What Does it Mean When an Employer Tells You Not to Compete?
What business does an employer have telling an employee not to compete with it? Shouldn’t the employer pick on someone of its own size? Non-compete agreements are more common than you might expect. For example, some employment contracts include non-compete clauses, either by themselves or in addition to non-disclosure clauses. It is also possible for an employer to ask an employee to sign a non-compete agreement after the employee has already started working for the employer. It might even be part of a separation agreement that an employee signs upon ending the employment relationship, as part of a wave of corporate layoffs.
A typical non-compete agreement says that, while the employee is working for the employer, he or she cannot establish a business that competes directly with the employer. Most non-compete agreements also extend this requirement beyond the end of the employment relationship. They specify a length of time after the employment relationship ends, during which the employee cannot set up a new business that competes with the employer. There are usually also provisions about how close geographically the former employee’s new business can be to the former employer.
For example, a non-compete agreement might say that you cannot set up a competing business within 50 miles of your employer’s flagship branch during your employment or within two years of leaving your current job. Some non-compete agreements even prohibit former employees from taking a job at an existing company that competes with your employer, within the geographic area and time range indicated in the non-compete agreement.
When are Non-Compete Agreements Legal?
Non-compete agreements exist to protect the interests of employers. They do not want you to take what you learned from working for your employer and use it to take business away from your employer. It is unclear what benefit, if any, non-compete agreements provide for employees.
Some non-compete agreements are patently unfair, and until recently, these were widespread. For example, a hospital might indicate in a nurse’s employment contract that the nurse cannot work for another hospital in Boulder for two years after she quits her job. If she starts looking for another job immediately and gets hired, her former employer will sue. If she doesn’t, her only choices are to skip town or change careers, both of which are costly. Non-compete agreements are not supposed to say, “You’ll never work in this town again, but sometimes that is how they sound. Taken to an extreme, this would mean that Mile High Mike’s Burritos could make its cooks promise not to work for another burrito restaurant in Boulder after they stop working at Mile High Mike’s.
By the time the COVID-19 pandemic started, regulators were expressing concern about the effects of overly restrictive non-compete agreements on the workforce. In early 2021, one of every five employment contracts where the employee did not have a bachelor’s degree included non-compete provisions. Employees such as medical assistants and physical plant workers hesitated to leave their jobs in search of higher pay in their field with other employers because of the non-compete clauses in their contracts. Therefore, the federal government issued executive orders instructing the Federal Trade Commission to impose penalties on employers who subject employees to overly restrictive non-compete agreements.
Resolving Disputes Arising From Non-Compete Agreements
All of this means that, if you signed a non-compete agreement because it was part of your employment contract, it might not be legally enforceable. The courts of Colorado have the right to decide on a case-by-case basis whether to enforce non-compete provisions in an employment contract.
If your employer has offered you a contract, and it includes a non-compete provision, you should review the contract thoroughly with a Boulder employment lawyer before you decide to sign. Your lawyer might be able to help you negotiate with your employer to modify the non-compete clauses in your contract. If your employer refuses to modify the non-compete clauses, the dispute resolution provision in your contract is another possible source of strength. If your contract says that the courts of Colorado have jurisdiction to rule on disputes arising from the contract, then it is up to the court to decide whether to enforce the non-compete provision in the event of a dispute.
Contact HKM Employment Attorneys, LLP, About Non-Compete Agreements
The Boulder employment lawyers at HKM Employment Attorneys, LLP, can counsel you about non-compete agreements. Contact our Boulder employment lawyers to set up a consultation.
