Legality Of Non-Compete Agreements

Probably not. Most courts have held that an employer engaged in illegal activity resulting in the departure of a worker cannot impose a non-compete agreement against the worker who has left the country for that reason. Already in Dyer`s case in 1414, the English common law decided not to enforce the prohibitions on non-competition, as they were by nature trade restrictions. [4] This prohibition remained unchanged until 1621, when a restriction limited to a given geographical site was established as an exception to the previously absolute rule. Nearly a hundred years later, the exception became the rule in Mitchel v Reynolds of 1711,[5] which provided the modern framework for analyzing the possibility of a non-competition clause. [6] It is not enough for your employer not to want you to bring your skills to a competitor. There must be a good reason for non-competition bans. For example, if the employer introduces you to the best customer, there may be a legitimate interest in preventing you from going to a competitor and luring those customers away. Goodwill developed in relation to customers gives the employer a competitive advantage. They can prevent you from withdrawing capital from it, so they are entitled to protection. What are the reasons why the courts consider a non-competition agreement to be appropriate? An employer who wishes a non-compete agreement may, in some cases, pay a “consideration”: additional compensation in exchange for the worker or seller who accepts this provision or another non-monetary benefit, such as. B a change in obligations or those responsible for the work.

However, the need to do so depends on your state`s law. As a general rule, your employer does not have to give you additional financial compensation, but this cannot have any consequences if the employer tries to enforce the agreement. Some states require the payment of counterparties, while others consider it simply an important part of the court review to decide the application of the agreement. A new law prohibits high-tech companies, but only those companies in Hawaii, from requiring their employees to enter into “non-competitive” and “non-favourable” agreements as a precondition for employment.