What is a non-compete agreement? In the United States, a non-compete agreement serves an essential role in the commercial field. For a long time, non-compete agreements have been used to restrict the behavior of employees after they terminated their contractual relationship with their employers. Even though they have been utilized in many states, non-compete agreements are still a controversial tool throughout the United States.
While non-compete agreements are enforceable in most U.S. states, they are considered void and unenforceable in others. But you may wonder what is a non-compete agreement? And why are they treated differently from state to state?
A non-compete agreement can take on many forms, but they all serve the same purpose – restricting or delaying one party’s ability to compete with the other party. For example, in an employment context one of the parties to the non-compete agreement faces a restriction on what future employment may be available to him or her after he or she leaves the employer.
A non-compete agreement, also known as covenant not to compete or restrictive covenant, is a contract where an employee promises not to enter into competition of any kind and for a specific time with the employer after the employment period is over. Additionally, a non-compete agreement can also prohibit the employee from revealing proprietary information or secrets to any other parties during employment or after employment ends. Generally, non-compete agreements, also called non-compete contracts, specify a certain length of time during which the employee is bound by the agreement after he or she leaves.
Normally, the non-compete agreements are signed when the contractual relationship between employer and employee begins. These types of agreements have specific clauses stipulating that an employee is barred to work for a competitor after his or her employment contract is over, regardless of the reason for termination. Non-compete agreements imply both a situation in which an employee resigns, or the employer terminates the contract. More important, employees are often prevented from working for a competitor, even if the new job would not involve disclosure of information from the previous employment relationship. Additionally, non-compete agreements can also bar a former employee to start up a new business in the same field as their former employer.
Non-compete agreements are common in the media field. For example, a popular TV host may easily change employment contracts from one TV channel to another, creating a huge impact on their first employer. Further, non-compete agreements are also common in the IT sector, where employees have access to proprietary information that is very valuable to an employer. However, these are not the only two fields where non-compete agreements are popular.
When it comes to the validity of non-compete agreements, this must be analyzed separately for each state, as this is a matter of state jurisdiction and laws. U.S. states vary widely in their recognition and enforcement of non-compete agreements. Many states have undertaken recent debates and are continuously updating their legislation in regard to the non-compete agreements. For instance, non-compete agreements are unenforceable in North Dakota and Oklahoma, while California does not recognize non-compete agreements at all. Conversely, in Florida, non-compete agreements may be enforced by the employer so long as they are reasonable with regard to time and geographical area and protect a legitimate business interest of the employer as defined by Florida law.
For more specific information about non-compete agreements in Florida, contact us, your business attorney in Florida, to assist you in understanding what is a non-compete agreement and help you with your legal needs or schedule a consultation.
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