traverselegal - May 8, 2012 - Non-Compete Law Basics, Noncompete Law
If you are the employee and you have signed a non-compete agreement, the first question that you always have is how to get out of this non-compete agreement. We get calls all the time from employees who either signed a non-compete going into employment or were asked to sign a non-compete contract and confidentiality agreement during their employment. They sign those thinking, of course, that everything will go great for life and all of a sudden there is a downsizing or you get fired, or there’s a change in management, and you wonder what your options are going out the door.
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Non-compete agreements typically are very broadly drafted, and so if you happen to be a person in the technology field and you’ve signed a non-compete agreement, many of those non-compete agreements are drafted so broadly that you couldn’t go work as a local web developer doing your own internal web design, for no customers. These things have to be limited to a legitimate business purpose. You, as the employee, typically have a much smaller budget for your lawyers to work with than the employer has. Negotiation is typically the approach that we use when we have an employee who wants to know, “How do I get out of this non-compete agreement. I’m either still employed or recently laid off. I’m looking at this other employment opportunity, and I don’t want to get their new employer in trouble. I don’t want to violate my non-compete.”
Welcome to Non-Compete Law Radio. My name is Non-Compete Attorney, Enrico Schaefer. We specialize in non-compete issues from both the employer and employee point of view under a variety of state laws, including Michigan, California, New York, and other states.
If you are the employee and you have signed a non-compete agreement, the first question that you always have is how to get out of this non-compete agreement. We get calls all the time from employees who either signed a non-compete going into employment or were asked to sign a non-compete contract and confidentiality agreement during their employment. They sign those thinking, of course, that everything will go great for life and all of a sudden there is a downsizing or you get fired, or there’s a change in management, and you wonder what your options are going out the door.
Non-compete agreements typically are very broadly drafted, and so if you happen to be a person in the technology field and you’ve signed a non-compete agreement, many of those non-compete agreements are drafted so broadly that you couldn’t go work as a local web developer doing your own internal web design, for no customers. These things have to be limited to a legitimate business purpose. You, as the employee, typically have a much smaller budget for your lawyers to work with than the employer has. Negotiation is typically the approach that we use when we have an employee who wants to know, “How do I get out of this non-compete agreement. I’m either still employed or recently laid off. I’m looking at this other employment opportunity, and I don’t want to get their new employer in trouble. I don’t want to violate my non-compete.”
Circumventing a non-compete agreement is really not circumventing that agreement at all. Circumventing a non-compete agreement oftentimes can only exist in court once a lawsuit has been filed for a violation of the no compete contract. What really you’re doing is you’re trying to negotiate with your ex-employer or your current employer with whom you’ll be terminating employment to get to an appropriate scope that both of you can live with. To avoid your non-compete, you are going to need expert legal advice.
Oftentimes, the employer doesn’t know how their own non-compete agreement is even drafted. What they’re primarily concerned about in many instances are the customers who you gained access through employment or brought with you when you came to work for the employer. Many times, that’s the primary activity they want to preclude. They don’t want you to start soliciting their customers. Other times, they don’t want you to go to work for certain competitors, but have no problem with you going to work generally with a competitor with certain limitations on behavior, with certain limitations on which customers that you’re going to call on, as long as you continue to abide by the confidentiality agreements and provisions in the no compete contract.
These are the types of things that you can sometimes negotiate. It doesn’t always work; it depends on who your employer is. It depends on how motivated they are to not only keep you from doing something they don’t want you to do, but whether or not they want to use you as an example to the other employees in order to make sure they don’t go work for a competitor or start soliciting customers or using confidential information inappropriately.
Our lesson for today is typically you need to be very careful about your non-compete contract. A good non-compete attorney will tell you that it is better to be proactive in these matters rather than making a commitment to a new employer and having a violation of non-compete threat letter be sent to both you and your new employer as you’re trying to start your new employment. If you have an ex-employer who is at all reasonable, we oftentimes can engage them in a conversation, renegotiate the non-compete to something that’s more narrow, that gives the employer the protection they need and allows the employee to get on with their life.
My name is non-compete attorney, Enrico Schaefer, and we will see you next time.
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