QUESTION

how valid are non compete agreements

Asked on Oct 28th, 2013 on Employment Contracts - Indiana
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1 ANSWER

Appellate Practice Attorney serving New York, NY
Except for California (where such agreements are almost always invalid), in the U.S. some are valid, some are not, depending on a myriad of factors.  Some of these factors include: whether the person sought to be restrained from competing with the business sold the business with which he now seeks to compete, or an interest in it; how long the restriction runs for; how broad is the restriction geographically; does  the provision bar all competition or is it more limited (e.g. cannot solicit the business' customers, can't work with customers with whom the employee worked within the past month of his employment with the business, etc.); whether the employee has special skills or is unskilled labor; whether the employer invested money and time to train the employee; whether the employee received extra pay or other consideration for signing the non-compete agreement; whether the competition would necessarily involve using the employer's trade secrets or proprietary information; whether the employee quit or was fired and, if fired, whether for cause or not; whether the employee had equal bargaining power when agreeing to the non-compete; whether the employer enforces the covenant against all employees or only selectively, etc. Also, in some cases, a Court may "blue pencil" a non-compete agreement.  For example, if the Court thinks that a covenant which bars all competition within 30 miles for two years is overbroad, it may revise it so that only solicitation within 10 miles for 1 year is prohibited. 
Answered on Oct 29th, 2013 at 1:13 PM

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