Non-compete clauses are not rare. In fact, a lot of employment contracts have non-compete clauses written into them and yet the employees do not know it. Your employment contract is the basis of your relationship with your employer. If your contract has a non-compete, then your ability to seek future work may be limited.
What is a Non-Compete Clause?
A non-compete agreement is a promise made between an employer and employee. Its purpose is usually to ensure that the employee will not compete with the employer’s business for a specified period of time.
It could also operate to prevent the employee from carrying on a similar business in the same geographical area as the employer after termination of their present relationship.
Non-compete agreements are one of a category of agreements called “restrictive covenants.” They are usually meant to protect the interest of the employer who may have spent a large amount of training the employee.
Non-compete agreements are usually written into the general employment contract. As such, it is critical to understand the employment contract before signing it.
What Does A Non-Compete Cover?
When an employer has legitimate business interests that need protection, they will usually insert a non-compete agreement into the general employment contract. This non-compete may be used to protect the employer on any of the following:
- Trade secrets: A lot of employers have made their success by virtue of the things they do differently in their business. If these things are not publically available, they may be trade secrets. The employer can ensure that employees who have to learn these secrets as part of their employment will not share them with the public or use them against the employer after the end of the employment
- Confidential information: An employee could be exposed to valuable or sensitive business information in the process of his or her work. The employer can ensure that this information is not used to compete against the business.
- Relationships with clients: This is a common reason for non-compete agreements. An employer can often have legitimate fears that the employee may take away business from the company by poaching the clients of the business.
- Goodwill: The good name of the business may also be attached to the employee. The employer can ensure that this goodwill is not used by the employee to compromise the employer’s business interests.
When is a Non-Compete Valid and Enforceable?
Not all non-compete agreements will be held valid by the courts. Many employers simply make non-compete agreements on the assumption that it will be valid. This validity depends on some key factors, however.
- Legitimate business interest: The employer must have a legitimate interest that he or she wishes to protect. This may be a trade secret, confidential information, or client lists.
- Reasonableness: The non-compete must also be reasonable. It must not be for too long a period and the geographical coverage must not be too wide.
- Undue burden: The non-compete agreement must not impose an undue burden on the employee. If it would result in a situation in which the employee cannot work after leaving the employment, it may cause undue hardship to the employee.
Have Questions About Your Legal Rights? Speak to an Employment Contract in Kansas City Today
If your employer is attempting to enforce an invalid non-compete clause from your employment contract, take legal action today and contact HKM Employment Attorneys. Our team of skilled employment lawyers in Kansas City is here to help.