Last Updated on May 31, 2023 by Anda Malescu
How long is a standard non-compete agreement in the United States? Although the job market is more and more uncertain and unpredictable, experts say non-compete agreements are becoming increasingly common. As the competition becomes greater and the economy becomes more technology-oriented, employers are more and more concerned about protecting their intellectual property rights and know-how.
A non-compete agreement is a contract between an employee and an employer in which the employee is prohibited to enter into competition with the employer after the termination of their contractual relationship. Such an agreement prevents employees from entering into markets or professions considered to be in direct competition with the employer.
Noncompete agreements are enforced when a relationship between an employer and employee ends and the employer wishes to prevent the employee from competing against them in their next position, whether working for a competitor in the same market or starting up another business in the same field.
When courts are analyzing the reasonableness of a non-compete agreement, they take into consideration multiple factors such as the length of the non-compete restriction, the geographical area, the scope of the non-compete agreement and the consideration given in exchange for the restriction.
However, there is no definition for a “standard non-compete agreement duration.” There is no such standard duration. When looking at the duration, courts analyze all the circumstances and they analyze the duration in conjunction with other factors. For instance, if the non-compete agreement is designed to protect valuable information, the non-compete agreement would probably be reasonable for the time period that specific information has value. Usually, courts do ban lifetime non-compete agreements because this would be against the rights of the employee and would hurt competition.
In order to enforce a non-compete clause, a plaintiff (who generally is the employer) has to demonstrate that the enforcement is sought for protection of their legitimate interest. As a result, a court will likely refuse to enforce an agreement that prohibits an employee from competing for the rest of his or her life. However, in many industries, a non-compete with a duration of 6-months will be considered reasonable, and therefore enforceable. The balance test that the courts use must show that the duration of the agreement does not exceed the time reasonably necessary to protect the employer’s legitimate business interests.
Currently in the United States there is a growing movement against the recognition and enforceability of non-compete agreements. And even in the states that still do recognize and enforce non-compete agreements, courts have set up particular rules that need to be followed in order for such an agreement to be enforceable. For example, governor of Washington State signed a law barring non-compete agreements for anyone who is making less than $100,000 annually. On the other hand, under California law, non-compete agreements are not enforceable. The law recognizes a non-compete agreement in limited circumstances such as prohibiting former employees to solicit customers or other employees away from the former employer. In North Dakota, non-compete agreements are not likely to be enforceable; with the narrow exception in which such an agreement would occur in connection with the sale of a business or the dissolution of a partnership.
For legal advice regarding the recognition and enforcement of a non-compete agreement in a specific state and circumstance, contact us, your business attorney in Florida.
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