Quitting your job or finishing your employment contract can be a huge relief, especially if you have already made plans to start a new job or are financially secure enough that you can afford to stay out of the workforce for a while. Think about all the things you will not miss about your old job. You will not miss the work-related social events for which you do not get paid but will cause you to be on your supervisor’s bad side if you do not attend. You will not miss spending long days wearing work-approved shoes that pinch your feet. If at all possible, you will choose a new job where you can wear clothes that show your tattoos and a hairstyle that makes you feel like the real you. Now that you no longer work for your old employer, they can no longer boss you around, or can they? Non-compete clauses, a common feature of employment contracts, restrict the activities of employees after the employee stops working for the employer. If you have questions about a non-compete agreement that you have signed or that your employer wants you to sign, contact a Charlotte employment contract lawyer from HKM Employment Attorneys LLP.
Non-Compete Clauses and Non-Disclosure Agreements
The success of many companies thrives on certain pieces of information that people outside the company do not know or that they cannot use without the company’s permission. (If you doubt this, consider the “chicken sandwich wars” that have dominated headlines in the spring of 2021. You can make a fried chicken sandwich at home, but it will not turn out exactly like Popeye’s, Wendy’s, Chick-fil-A, or whichever one is your favorite. Each restaurant has its own recipe with its own unique details known only to people inside the company.) Under intellectual property laws, some insider knowledge can be protected by patents, copyright, or trademarks. Some insider knowledge, such as client lists and company policies, does not fit the legal definition of intellectual property, but if it became public knowledge, the company would lose its competitive edge.
Non-disclosure agreements and non-compete agreements seek to protect this corporate insider knowledge. They prevent employees from revealing confidential information they have learned on the job or using it to compete directly with the employer. Some non-compete agreements prevent the employee from establishing a company that competes with the former employer for a set period of time after the employee stops working for the employer.
North Carolina Non-Compete Agreement Laws
North Carolina law allows judges to decide on a case-by-case basis whether a non-compete agreement is enforceable or whether it unfairly restricts the employee’s right to practice their profession or trade. Non-compete agreements should specify limits of time and geography, and the more specific they are, the more likely the court is to enforce them. If the non-compete agreement says that, for one year after the termination of employment, the employee may not open a barbecue restaurant within a 30-mile radius of Branwell’s BBQ and then specifies the address of the employer’s restaurant, this is better than saying that the employee cannot open a barbecue restaurant in the Piedmont region during the same period of time because it is more specific. The Charlotte employment lawyers at HKM Employment Attorneys LLP can help you decide whether the non-compete clause that your prospective employer wants you to sign is reasonable and enforceable.
North Carolina law allows judges to strike individual provisions from non-compete agreements while enforcing the rest of the agreement. Meanwhile, North Carolina is an at-will employment state, which means that, unless you have an employment contract that states otherwise, your employer is free to terminate your employment at any time and for any reason. Therefore, many employees sign contracts that contain restrictive non-compete clauses just because it is a better option than having no contract at all and going to work every day not knowing whether your employer is going to tell you that you are out of a job.
The July 2021 Executive Order Targeting Non-Compete Clauses
In July 2021, President Biden signed an executive order targeting a wide variety of business practices that infringe on the rights of workers; one of the targets of the executive order is the overreaching use of non-compete clauses in employment contracts. Non-compete clauses in employment contracts are so widespread that, in many cases, the employer would not be leaving itself vulnerable by not including a non-compete provision in the contract. Non-compete clauses are most appropriate for employees in high-level, decision-making positions in the company, whose jobs give them access to large volumes of insider information that they could use to compete with the employer if they chose to do so, but millions of people whose jobs do not fit that description are currently working under non-compete contracts. According to National Law Review, about one third of employers require their employees to sign non-compete agreements, and about one fifth of workers without a bachelor’s degree are working under employment contracts with non-compete clauses.
The executive order authorizes the Federal Trade Commission to take action against employers who misuse non-compete agreements; the FTC may impose financial penalties on businesses that place unfair restrictions on their current and former employees through the use of non-compete clauses. Employers still have the right to require employees not to share client lists after the employee has stopped working for the employer, but workers are allowed to use their employable skills in their own careers, even after they leave their current employers. All of this means that federal and state laws and court decisions about non-compete agreements will enforce and interpret the executive order in the coming months and years, and you will need the guidance of a Charlotte employment contract lawyer if your employer asks you to sign a non-compete agreement.
Contact a North Carolina Employment Lawyer About Non-Compete Agreements
An employment lawyer can help you get an employment contract that protects your rights as a worker and potential entrepreneur. Contact the employment lawyers at HKM Employment Attorneys LLP in Charlotte, North Carolina to set up a consultation.