Non-compete agreements are often part of a severance package. This package, also sometimes known as a severance agreement, contains multiple requirements for the employee to follow upon his or her termination. In exchange for following these requirements, the employee receives some final compensation from the company which can be payment for unused sick time or a lump sum paycheck.
A non-compete agreement is one of the provisions that makes up a standard severance package. This agreement is a crucial part of a severance package because it protects the company’s competitive edge by requiring its former employees to abstain from seeking work with its competitors for a set amount of time.
How Do Non-Compete Agreements Protect a Company?
Non-compete agreements operate on the principle that a company has the right to protect the investment it makes in training its employees. Certain industries require employees to undergo rigorous, highly-specialized training to develop the skills they need to effectively perform their jobs. This training can be both expensive and time-consuming, creating a significant operating expense for the employer. If an employee of a company receives such training and then takes a position with one of his or her employer’s direct competitors, the first employer loses a huge investment while the second company gains a qualified worker without having to spend time, money or other resources to prepare him or her for the position.
Some non-compete agreements can be unreasonably restrictive, though. They’re meant to protect their companies’ investments, not to punish employees for leaving the company or otherwise limit their careers. When a proposed non-compete agreement restricts an employee’s professional freedom too much, he or she can have it rewritten and bring it back to the company for approval. This is part of the negotiation process that most new employees undergo at the start of a new position. It is important for an employee to work with a knowledgeable employment attorney when he or she is asked to sign a non-compete agreement. An employment attorney will understand the legal jargon contained within the non-compete agreement and can help develop a less restrictive contract that still protects the company’s investment in its employee.
What are Unreasonable Stipulations in a Non-Compete Agreement?
Any requirement of a former employee that can be determined to be restrictive to the point that it can negatively impact his or her career may be deemed to be unreasonable. An example of an unreasonable requirement in a non-compete agreement would be requiring the individual to refrain from seeking work with a competitor for ten years. In ten years, the technology used in an individual’s field can advance to the point that he or she might be unable to effectively perform his or her job upon returning to the field. A more reasonable length of time for a non-compete clause is two years.
An example of non-compete clause laws in Washington can be found in RCW 49.44.190.
Non-Compete Attorneys Can Help
If you’ve recently taken a new job and have been asked to sign a non-compete agreement, first consult with one of the knowledgeable attorneys at HKM Employment Attorneys LLP. We’re here to help you develop the best employment contract possible. Call our firm today at 206-838-2504.
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