Last week, the President signed an executive order on Promoting Competition in the American Economy, encouraging the Federal Trade Commission (FTC) to formulate rules to curtail the use of non-compete clauses believed to hurt workers. Falling short of what many hoped would be a ban on non-compete clauses, the order has no impact on the current law or enforceability of non-competition agreements, but it may eventually result in less restrictive agreements depending on FTC findings. As it stands, however, roughly half of private sector businesses require employees to enter non-compete agreements, which many believe unfairly limits worker mobility and opportunity.
Non-compete agreements, sometimes called restrictive covenant agreements, exist to protect proprietary information and unfair competition. Non-compete agreements are often necessary to prevent an employee who has received extensive, specialized and often costly training from turning right around and competing against the employer after signing on with a competitor or starting a similar business. Non-compete agreements also come into play when an employer stands to lose customers as a direct result of the relationship formed between one of their employees and the employer’s customers.
A non-compete can restrict an employee from competing within a certain geographic area for a reasonable amount of time – not everywhere or forever. However, despite the fact non competes ‘must be reasonable’ to be deemed fair, they still can impose hardship on an employee who may feel trapped, unable to move to alternative employment or find a higher paying job without violating their agreement. If you are asked to sign a non-compete agreement, it is worthwhile to visit with an experienced employment law attorney to review the agreement so you know exactly what you are agreeing to, or countering with a less restrictive agreement. If you have violated a non-compete and are subject to a lawsuit, it is crucial to contact an experienced non-compete attorney ASAP to protect your rights under the law. Contact the Quad Cities non-compete agreement employment law attorneys of McDonald, Woodward & Carlson PC for help at 563-355-6478.