Non-compete agreements

Finding a new job is rarely easy, but it can be made even more difficult if the number of potential employers is limited due to binding non-compete agreements. Particularly for managers who have spent their careers specializing in one industry, non-compete agreements can be debilitating and prevent them from filling that perfect opening.

According to the U.S. Treasury, around 18 percent of all American workers are covered by non-compete agreements, and roughly 37 percent will sign one at some point in their careers. With millions of employees working under such agreements, it’s important to take a close look at the fine print.

Why do non-compete agreements exist?

Non-compete agreements almost universally favor companies over the labor force. They are used to help protect a company’s trade secrets, reduce turnover, and prevent top talent from working for their competitors. While companies would argue they can provide stability to an industry and therefore increase job security, labor receives no guarantees as a direct result of the agreements. Although employees may receive increased benefits and compensation in return for signing a non-compete agreement, individuals rarely see any benefit from the agreement itself.

Non-competes by state

While non-compete agreements are ubiquitous across the country, enforcement of such agreements falls to individual states as there is no federal law concerning such contracts. Some states have a history of refusing to enforce non-compete agreements, while others have strictly upheld the agreements time and again.

With more public attention being paid to the use and abuse of non-competes, more and more states are reconsidering their laws regarding such contracts. Despite the ongoing changes, knowing your state’s laws and track record on enforcement may be something to consider before signing your next contract.

Can I get out of my non-compete?

Companies will choose to enforce or not enforce non-compete agreements for different reasons, but challenging those agreements is an option for those willing to take on their former employers. The success of such a challenge will often depend on the specific language of the contract and the state in which the employee lives. Legal experts advise employees to study the agreements closely and research state laws before pursuing legal action.

Below you will find additional information and resources for dealing with non-compete agreement issues: