Here is an interesting article in today’s Chicago Tribune about the proliferation of non-compete agreements. I thought this was a good opportunity to say a few words here about non-compete agreements.
As the article observes, more and more employers are using non-compete agreements for more and more employees, but the article also notes that such agreements can be difficult to enforce. Indeed, whether to enforce a non-compete agreement is a vexing issue for many employers. From a practical standpoint, it is costly to pay an attorney to go to court to seek an injunction or other remedy to stop the ex-employee’s competitive activity, and the success of such an action is rarely certain. In Washington, whether a covenant not to compete is reasonable involves a consideration of three factors: (1) whether restraint is necessary for the protection of the business or goodwill of the employer, (2) whether it imposes upon the employee any greater restraint than is reasonably necessary to secure the employer’s business or goodwill, and (3) whether there would be injury to the public by the loss of the service and skill of the employee so as to warrant non-enforcement of the covenant. Some courts are reluctant to enforce non-compete agreements for fear of depriving someone of his or her livelihood.
Usually, practicality will prevail in these issues, and whether an employer will want to incur the cost of a legal action will turn on whether the ex-employee really is taking business and the amount of business at stake. Nevertheless, an employee who chooses to ignore their non-compete agreement typically will, at the very least, receive a letter from a company attorney threatening legal action. Whether that is just a threat or whether the employer will actually back up the threat with litigation can be anyone’s guess, but an employee who ignores such a letter is taking a risk and should seek legal advice.