Last Updated on December 9, 2022 by Anda Malescu
We discuss how to fight a non-compete agreement under American law. In the United States, a non-compete agreement is a contractual agreement that exists between an employer and employee that states that the employee agrees not to use any information gained while working for the employer to either aid a competitor, work for a competitor or for use with a competing business idea.
A non-compete is also commonly referred to as a non-compete agreement, non-compete covenant, non-compete clause, and a covenant not to compete. The purpose of non-compete agreements is to protect the intellectual property, know-how, experience and confidential information of an employer against instances where former employees start their own business in the same field or shift to a company that is a competitor of the former employer. The article discusses below more details about this type of contract, focusing on how to fight a non-compete agreement once one is already signed.
Non-compete agreements in the United States are regulated and governed by state law, not federal law. Also, not all of the states in the United States recognize and enforce non-compete agreements. For instance, in Texas, a non-compete agreement is enforceable only by meeting the following two requirements: the non-compete agreement must be ancillary to another agreement and it must be reasonable. Conversely, California enforces almost no non-compete agreement, regardless of the circumstances. Florida on the other hand does recognize and enforce non-compete agreements on a basis of reasonableness of the instrument.
Usually, when a court has to address a non-compete agreement their focus is on determining whether the contract is reasonable or not. In deciding whether the contract is reasonable, a court usually takes into consideration the potential harm that the employer could suffer, the duration of the contract, the territorial prohibitions, the impact on the employee and their financial status, and the interest of the general public. There are a couple of different aspects on which one can fight a non-compete agreement.
First, the former employee can show the court that the new activity (whether it is another job, or a new business started by him or her) would not violate the terms of the non-compete agreement.
Second, the former employee can show the court that the former employer lacks a legitimate business interest. In other words, the former employee can demonstrate that he or she did not have access or exposure to information that it is mentioned in the non-compete agreement, and therefore there is no legitimate business interest to protect to begin with.
Third, a former employee can ask for a non-compete agreement to be rendered void when the contract contains overly broad and unreasonable limitations. For example, such situation occurs when a company that only does business in one state prohibits the former employee to get a new job with a competitor or start a company in another state, different than the one in which the former employer conducts business.
Fourth, a former employee can challenge a non-compete agreement when the he or she has been tricked into signing it.
However, this is a non-exhaustive list of approaches on how to fight a non-compete agreement and the possibilities do not stop here. For more information on how to fight a non-compete agreement, contact us, your business attorney in Florida, to help you with your non-compete agreement. or schedule a consultation.
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