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Am I Bound by this Non-Compete Agreement?

Non-compete agreements (sometimes called non-competition agreements or covenants not to compete, and often including non-solicitation of employees and non-solicitation of customers) are increasingly common across all levels of employees.  Historically, these agreements were reserved for key employees with highly specialized know-how or training, or employees who had “the keys to the castle” for the employer (picture the handful of people who know the formula for Coke).

Recently, employers have greatly expanded their use of non-competes.  Employers in Texas have made fire inspectors, hairdressers, and fitness professionals sign non-competes.  Famously, the sandwich chain Jimmy Johns makes the employees who assemble the sandwiches sign non-competes.

Some examples of employees who are often bound by such agreements include:

There is a nationwide conversation taking place about the use of non-competes.  As many commentators have recently discussed, companies gain great protection from these agreements, and there is little downside to making employees sign them.

For employees who have not yet signed a non-compete agreement, they can seek out legal advice as to the potential affect of that document, and provided they have leverage, can negotiate its terms. This up-front negotiation can be very valuable to the employee in the long run.

Unfortunately, lawyers who represent individuals usually see a non-compete for the first time as the employee is on the way out of the company or gearing up to leave and compete, either with an existing competitor or by opening up their own competing business.

The key questions in that scenario are:

  1. Is the non-compete agreement enforceable?
  2. What does is prohibit me from doing?
  3. If I think I might violate it, what is my exposure, and given that exposure, how should I proceed?