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non-compete agreeements by Heather Bussing on HRExaminer

Heather Bussing Returns To The HRExaminer Editorial Advisory Board With Information on Non-Compete Agreements.

Heather Bussing is a returning contributor to our HRExaminer Editorial Advisory Board. Heather has practiced employment and business law for over 20 years. She has represented employers, unions and employees in every aspect of employment and labor law including contract negotiations, discrimination and wage hour issues. While the courtroom is a place she’s very familiar with, her preferred approach to employment law is to prevent problems through early intervention and good policies and agreements. Full bio


Is Your Non-compete Agreement Enforceable?

by Heather Bussing
A Non-compete agreement is a contract between an employer and employee where the employee agrees not to work for competitors of the employer for a certain amount of time after the employee leaves.

Each state has its own unique laws and rules about whether, when and to what extent a non-compete agreement is enforceable.  Usually the law where the employee works applies even if the company is located in another state where the agreements are enforceable.  Recently Georgia, which had traditionally been hostile to enforcing non-compete agreements, enacted legislation that expressly permits the enforcement of noncompete agreements under fairly broad circumstances.

Anatomy of a Non-Compete Agreement

Non-compete agreements typically have two important parts: 1) protection of trade-secrets; 2) restrictions on where employees can work after they leave.

The trade secret protection is essentially a non-disclosure agreement and is designed to keep a company’s proprietary information secret. It usually covers company product information, sales strategy and client lists and contains a long list of other things that boil down to one of the above.

The work restrictions usually prevent an employee from working for a competitor in the same market or geographical area—usually for one or two years. These provisions are often drafted so broadly that the only place the employee could ever work would be a research substation in Antarctica teaching polar bears to surf.

Non-Compete Agreements Are Often Restricted or Unenforceable
Because non-compete agreements are so restrictive, they are often restricted or not enforceable. In California, non-competes are effectively illegal unless you are selling a business. Other states will enforce some provisions, usually the trade secret protection, but not the work restrictions.

The first thing to look at is whether there was some form of payment or consideration for the non-compete agreement. When the agreement is signed at the beginning of employment, courts will usually interpret the NCA to be part of the overall employment deal and find that there was some fair exchange for the agreement. But when an employer asks an employee to sign a non-compete agreement after starting employment and there is no extra payment or benefit to the employee for signing it, then almost all courts will invalidate the agreement for lack of consideration.

The next thing to consider is the laws of the states involved—where the employer is headquartered and where the employee will physically be working. If either has restrictions against enforcing NCAs, then the agreement may not be effective.

About one-third of states have some restriction on the enforceability of non-compete agreements because they interfere with a person’s basic ability to work and make a living. The restrictions usually limit the geographical area where the employee cannot work for a competitor and limit the time of the non-compete to less than two years. The employer has the burden of showing that any restriction is reasonable and necessary to protect against unfair competition. California, Louisiana, Alabama, Florida, Oregon and Michigan have the most restrictions against non-compete agreements. Other states, like Texas, will enforce the agreement but the courts often re-write non-compete provisions to the restrictions the employer can prove are necessary to preventing an unfair advantage by the new employer.

In California, non-compete agreements are illegal and unenforceable except in very limited situations. California will recognize an employer’s right to protect trade secrets, but only if the employer can show that the information really is proprietary and should be kept secret—not just because the employer says it is. Even client lists are not secret if the information can be obtained in other ways besides the employer’s internal lists.

In addition, employers who have fired employees working in California for refusing to sign a non-compete agreement have been liable to the employee for wrongful termination and have also been liable for damages for unfair trade practices for trying to enforce a non-compete agreement in bad faith.

So before you require employees to sign a non-compete agreement, make sure the agreement is valid under the law where the employee works.

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  • Heather Bussing

    Yesterday the Colorado Supreme Court issued a decision that held that a noncompete signed after the employee started working was still enforceable.  See Eric Mayer’s blog post on the Colorado decision and other recent court decisions at

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  • Most of the time in NC they are unenforceable due to either necessary hardships or being too broad

  • Jeff

    I have a non compete in ohio, for 10 years. But my employer has me sign an employment contract yearly. Is the non compete not enforceable ?

  • kathy

    if an enploye is fired is the non conpete still inforceable in the state of nj?

  • Tom

    I signed a 2yr non compete in Minnesota. Within 3 months time, my pay structure was totally changed from salary to strait commision without signing anything for the new pay scale. I have been with my employer for only 7 months and i am looking to leave. Do i have the grounds for getting out of my contract?

  • If you are looking for information on noncompetes in your state, start here. The chart was last updated in 2013. Then be sure to talk to an employment attorney in your area because the law changes often, sometimes because a new statute is passed, and sometimes due to interpretation in a case by courts.

  • Mr. Shadow

    So essentially, don’t sign the non-compete agreement unless you are being compensated.

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  • Neha reddy

    My Employer is in Pennsylvania and i am working in california, is my Non-Competent agreement still Enforceable?

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  • Richard Ennis

    I just received a copy of the non compete from the job I just quit on and I don’t see a time frame of how long on it and it does not have the name of the company it’s a mother for another business they own is it still valid

  • Jenny

    This is really good news. I worked in a salon where my employer made me sign a non compete contract probably 4-6 months after i started. She never gave me a signed copy to take home and found excuses (suspicions, really) not to let me take a look again. The only thing I remember is I couldn’t work anywhere within 20 miles of her salon which I deemed very unjust, considering myself and an other employee did not have a car and the cost of transportation in the Bay Area can be expensive for 20 miles if we quit or were terminated. The Bay Area is VAST but after looking at my maps to consider my options I might as well moved elsewhere!

    I was terminated about a month ago and when asked for everything I have signed in her salon, she has not complied whatsoever. Not surprising, as a lot of past employees have been coming for her for legal issues as well as personal. But before reading your blog I thought I was screwed, and everything she was doing the law deemed it ok. Now I love California a little bit more, and glad there are people like you who help educate someone like me who knows nothing about laws other than the basics.

    My only question is, if she found out I worked in an other salon within 20 miles does she still have leverage to sue me although with your information her efforts would most likely be ineffective? Should I hire a lawyer to be prepared? Is it possible she knows that non competes aren’t enforceable in California and made one anyway to scare us? Or will she be really forced to take a loss since with your information, I can live freely to live out my livelihood without all this drama?

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  • Hector Von borstel

    If my corporate office is in Utah but I work the California teritory and I have a non compete agreement for 3yrs but I’m labeled as an independent contractor is the Non compete agreement forcible?

  • Hector Von borstel

    If my corporate office is in Utah and I work out of California and I have a 3yr non compete agreement and it has not compensation if I’m fired or let go, is the agreement enforcible? And does it matter if I quit or the company let’s me go?

  • maverick909

    Neha, did you ever find out if the Non-compete from PA is enforceable in CA?

  • Generally, companies cannot legally enforce noncompete agreements against employees working in California. However, that does not mean that they don’t try and often file in their home state to try to get a temporary restraining order to prevent the employee from working for the new employer.

    So just because the non-compete is illegal in CA, does not mean that a former employer won’t try to enforce it anyway. The important factors are whether the new job is with a direct competitor and whether the employee has customer info and trade secrets that the old employer is worried about.

  • maverick909

    Thanks for your reply Heather. I signed a non-compete agreement with a job recruiter in PA but I live and work in CA. I have never worked outside of CA. The recruiter has offices all over the country including CA. The agreement states that I cannot work on my current job until 6 months after I have left that company. The contract was for 12 months with a possible extension of 6 more for a total of 18 months. I have been on this job for 22 months and counting. Now the company wants to hire me directly as a benefited employee. Can the recruiter stop me with the non-compete clause? I do not have any trade secrets or info that the job placement (recruiter) company can complain about. I was hired for the skill set I brought with me to the job.

  • Take your entire agreement to an employment attorney who represents workers and get some advice for your specific situation. Sorry, I can’t do that online. I hope things work out for you.

  • 23m Seattle

    Hi Heather, hope you are still viewing this. Quick Question:

    Signed a 1 year non compete for a startup in Seattle, WA. Was recently let go and have received another offer from a competitor based in San Francisco, CA. I’m wondering what issues I may face – given that I did not gain any proprietary knowledge from my previous employer.

  • Carmen

    My sister currently works as a dental hygienist. They required her to sign one and at the time was getting 30 hours. After a dentist left the practice, they dropped her hours to 10 a week, but tell her she cannot find part time work at another office. Is this legal since they are limiting her ability to make a living?

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  • Andrea

    Hello Heather, not sure if you still read these comments. If I have a noncompete agreement for 12 months in any place within the US or beyond its borders (which means any place in the world), can it be enforceable in FL? Thanks!

  • Hi Everyone, Here is a 2016-2017 reference on how and whether each state enforces noncompete agreements by the employment lawyers at Seyforth Shaw. It will give you a general idea about whether your noncompete can be enforced. Then make an appointment to see an employment attorney in the state where you live/work to get specific advice on your situation.

    I’m sorry, but I can’t give you legal advice online or by email.

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  • Chance Ryan

    I ran into this doing Massage Therapy; my family lawyers informed me “TYPICALLY” Non-competes are only enforceable w/ Management/Executives, To Protect Trade Secrets, or Recover Training Costs…

    She told me that if you don’t fall into these categories then usually it’s not enforceable, HOWEVER; Most states are “AT WILL EMPLOYMENT” this allows a company to terminate your services without reason, absent an employment labor contract.

    The US is a free market economy; given the state of the economy it’s becoming even more difficult to enforce these things, but it’s almost pointless because employers have a multitude of ways to terminate employment without worrying if a non-compete is enforceable or not.

    Matter or fact if you don’t sign it they can rescind the offer, only 1 state California has them totally illegal, which means you’ll never be presented with one. But if your Joe or Sally employee your not privy to anything a company is legitimately worried about.

  • Chance Ryan

    I know this post was 6yrs ago but Non-Competes in Colorado are generally not enforceable, with exceptions to Executives, Recovery of Training Pay, or Protecting trade secrets so 99% of workers don’t fall into this category.

  • Chance Ryan

    Correct! I was presented w/ my 1st non-compete clause in Charlotte took it to my family lawyers and was told it wasn’t worth the paper they are written on. Especially given the state of current economy!

    That’s the thing I think people miss about all this, sure they can be legal in a state but most times they aren’t enforceable, because of those 3 categories the employee must fall into for it to be enforceable.

  • Martin Sugar

    my employer just closed his dental practice and is now unlicensed in MD and lives in Florida. We have a not compete clause. Since he cannot practice without a license and the office is permanently closed. Am I nologer bond by the clause?

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