A non-compete provision can prevent a talented employee from leaving to work for the competition. This protection is good for the employer that has invested significant training time and resources in the employee, especially when the employee has access to confidential information, client relationships and trade secrets.
However, many State Legislators feel non-competes are bad public policy. Why? Because non-competes hinder an employee's mobility, suppress competition for talent, and operate as a "restraint on trade."
Some States are passing laws (or have passed laws) restricting (or outright banning) the use and enforcement of non-compete agreements.
Did you know...
- In California, Oklahoma, and North Dakota, almost all non-compete agreements are void unless entered into as part of the sale of a business.
- In Georgia, non-compete provisions are only enforceable against salespeople, key professionals, and employees with supervisory responsibilities.
- In Illinois, employers cannot enforce a non-compete agreement with an employee making $13.00 per hour or less.
- In a new law passed this month, Massachusetts non-compete agreements cannot extend longer than one year, and the employer must pay at least 50% of the employee's highest salary during the time he or she cannot work elsewhere.
- In Minnesota and Oregon, non-compete provisions are void and unenforceable unless the fact that a non-compete is a condition of employment is stated in writing prior to hire.
- Nevada requires employers to provide "valuable consideration" to employees in exchange for non-compete and non-solicitation agreements.
- New York City, Pennsylvania, New Hampshire, and Vermont have introduced laws restricting non-compete agreements. Employers operating in those jurisdictions should keep an eye out for updates in the news.
- In Utah, non-compete agreements cannot extend longer than one year.
Our list is not complete as there are complicated case opinions further interpreting (confusing?) specific state laws.
Do your non-compete provisions comply with applicable statutes and case law?
Even if non-compete agreements are restricted or banned in your state, non-solicitation, confidentiality, and non-disclosure provisions may be acceptable ways to protect your business.► Back to News & Resources