What Is A Non-Compete Agreement: An Employee’s Guide

What Is A Non-Compete Agreement: An Employee’s Guide

Being offered a new job is a very exciting time. But it is important not to let that excitement you are feeling interfere with your judgment. It is not uncommon for employers to request that you sign a non-compete agreement as a condition of your employment. A non-compete agreement may also be presented to you as a current employee as a condition of continued employment or receipt of certain benefits (such as stock options). If you are wondering, “what is a non-compete agreement?” and what to expect, our guide will highlight what you need to know before you sign one.

What Is A Non-Compete Agreement?

A non-compete agreement, also known as a covenant not to compete, is a contract between an employer and an employee. It contains language that can control the employee’s behavior long after they leave the company. Non-compete agreements for employees typically prevent individuals from working for a competitor or becoming a competitor (such as launching an independent business) during their employment and after the termination of employment. Many non-compete agreements provide that the non-competition and other restrictive covenants are triggered by any termination of employment, even one without cause.

Some employers will intentionally use vague language that makes it very difficult for someone to continue to work in their field of choice, so it is advisable to be cautious and diligent before signing this type of document.

How Does a Non-Compete Agreement for Employees Work?

One of the most common questions people ask after, “What is a non-compete agreement?” is

“How does a non-compete agreement for employees work?

Optimally, the contract should be fair and equitable for both the employer and employee. Although, it is not uncommon for employers to construct documents that favor their best interests.

The standard information the agreement includes:

  • A beginning date on which the contract will become effective
  • The reason that the document is being enacted
  • The specific dates the employee will be prevented from working for a competitor or as an individual competitor
  • Specific language defining what business interest is being protected by the agreement and the scope of work which would be considered “in competition” with the employer
  • The geographic scope of the non-compete agreement
  • Language that details how the employee will be compensated for agreeing to the terms of the contract

There are multiple areas regarding competition that are often considered for inclusion in a non-compete agreement, including:

  • client relationships, lists, and associated data/contact information;
  • proprietary or sensitive information;
  • valuable ideas and trademarked business practices in direct competition with the company;
  • trade secrets; or
  • clients, patients, and customers within a specific geographic location

The dates and detailed language that the agreement will be in effect should be carefully considered. It is highly advised to consult with an attorney to ensure that you understand the full parameters of the contract and how it works before you sign the proposed agreement. An employment law attorney can help ensure you are not jeopardizing your career by signing a non-compete agreement that severely limits you after you leave your job.

Are Non-Compete Agreements Allowed in Florida?

State law (and other restrictive covenants) varies greatly from state to state.

Florida does allow employers to use non-compete agreements. These could be requested or required not only for employees but also for contractors, consultants, and outside professionals that are involved in mergers and acquisitions.

Pros and Cons

When deciding whether or not to sign a non-compete agreement, there are pros and cons you should consider.

Pros:

  • It protects the company’s trade secrets, which shields sensitive information from being shared that can affect competitiveness.
  • It can reduce turnover, which will provide stability for both parties and benefit employees who do not like to change jobs very often.
  • It could act as an incentive for the company to provide training, making employees more inclined to stay in their jobs.

Cons:

  • It can limit the employee’s bargaining power — since many individuals are asked to sign one after they are hired and take other previous potential employment opportunities “off the table.”
  • It can take an employee out of their field altogether because many agreements can be so restrictive that upon leaving the company, the former employee is effectively barred from using their skills and experience in a new position.

What to Do If You Are Asked to Sign a Non-Compete Document

If a potential employer or current employer asks you to sign a non-compete agreement, be cautious and do not sign it immediately. Do not allow them to bully you or put pressure on you to immediately sign a document that could end up significantly restricting your ability to make a living in the future.

A company may include vague language, unreasonable periods of time, or unreasonable restrictions on geographic areas for your future work, among other restrictions that could severely limit what you do if you leave.

Non-compete agreements for employees or potential employees should be thoroughly reviewed and analyzed to determine what the language means and how it would affect your future work. It is advisable to consult with an attorney with expertise and experience in non-compete agreements to review, analyze, and ensure that you understand the contract’s parameters.

When to Contact an Employment Law Attorney

Signing a non-compete document should be approached with caution as it can have consequential effects on you and your family.

If you have been given a non-compete agreement, the next step is to contact an employment lawyer before signing to ensure that all the parameters are acceptable. An employment law attorney can also help you if you have been served with papers by a former employer (or have received a “cease and desist” letter from a former employer)alleging that you have violated a non-compete agreement.

At Wenzel Fenton Cabassa, P.A., we review, analyze, negotiate, and restructure employment and termination agreements, including non-compete agreements, with the legal knowledge and attention to detail employees need. When it comes time to fight temporary injunctions brought by employers, we utilize all resources in helping clients navigate through a complex and often contentious injunctive relief process.

We are the employee’s law firm — a tireless legal team fighting for your rights.

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