QUESTION

Non-Complete - Is it legally binding?

Asked on Oct 07th, 2013 on Employment Contracts - Tennessee
More details to this question:
I work for an IT consulting firm in the state of Tennessee. When I was hired, my employer at the time had me sign on a non-compete document which basically prevents me from working for other IT consulting firms in the area, and any clients that my firm deals with. The main issue is that I do not possess a copy of the non-compete, however, I do not remember that the document specified any radius for the non-compete, expiration date for the contract. The employer failed to provide a paper copy or electronic for the non-compete agreement even though I asked for it. If I ask for it now they would know that I'm trying to leave. My question is: How legal are non-compete documents in the state of Tennessee? Can an employer hold an employee indefinitely without specifically defining a millage radius and time period? My firm has a monopoly on the market in the town I work in and I need an exit strategy without a lawsuit.
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1 ANSWER

Appellate Practice Attorney serving New York, NY
While non-competition agreements are looked at more closely than most other types of agreements, the general rule in most states (not California, which enforces non-competes only in very rare circumstances) is that they can be enforceable if they are reasonably necessary to protect the employer's legitimate interests.  This depends on such factors as whether there are trade secrets involved, whether the employee is highly skilled or has no particular special qualifications, whether the employee received additional consideration (other than continued employment) for agreeing to the non-compete, whether the employer spent considerable money and/or time training the employee, whether the provision is resonably limited in time and geographic scope, whether the provison prohibits all competition, or just prohibits solicitation, whether it precludes contact with anyone who's been a customer of the employer for the past 30 years, or just those who have actually dealt with the employee while still employed by the employer over the past six months, whether the contract was negotiated fully between relative equals, or is simply a form a large business forces all of its employees to sign, and similar factors.  The answer is often not black and white, it's a balancing act. Another question is whether the Court's will "blue pencil" the clause, or toss it out altogether.  For example, lets say the clause prohibits you from competing within 5 miles for 3 years, and the Court thinks it would have reasonable to have kept you from competing within 2 miles for a year.  In most jurisdictions, the  Court has the power to either invalidate the provision completely, or rewrite it to be more narrow and reasonable.  Which course the Court will follow may depend on how overreaching it thinks the employer has been. If the non-compete agreement is a standard one whch all employees sign, you may be able to get a copy from a co-worker, or former co-worker, without your employer finding out.  Be careful that you don't ask any co-worker to do anything which would violate their obligations to the employer (for example, the agreement may require that it be kept confidential). Unfortunately, even if you are likely to prevail in a lawsuit and your former employer knows it, some employers like to sue competing ex-employees as a warning to other employees of what will happen to them if they leave and compete.
Answered on Oct 07th, 2013 at 2:33 PM

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