What Does a Non-Compete Agreement Mean?

December 29, 2017
The Law Firm of J.W. Stafford

Many companies want to protect their customer list, their proprietary information, and their trade secrets. In an effort to ensure their information does not fall into the wrong hands – and to ensure employees don’t steal their customers – it’s common for businesses to require new hires or even existing workers to sign non-compete agreements.

Non-compete agreements are agreements made between employers and employees that restrict an employee’s options for other work.  Non-competes are not always enforceable, so companies need to be careful in how they draft these contracts in order to ensure that the non-compete agreement will provide expected protection.

Employees also need to understand what they are signing, because a non-compete agreement will impose limitations on their ability to make a living after leaving their current employer. A Baltimore employment contract lawyer can provide assistance to employees who are being presented with a non-compete and who must make a decision regarding whether to sign.

An experienced attorney can also provide advice if employers and employees are negotiating over the terms of a non-compete, as well as assistance if an employee has been accused of breaching a non-compete agreement.  Both employers and employees should contact an attorney for help as soon as possible when dealing with a non-compete agreement.

What Does a Non-Compete Agreement Mean for Future Employment?

When an employer asks a worker to sign a non-compete, the agreement typically will detail specific things an employee cannot do.

For example, the contract may specify that the employee is not allowed to work for direct competitors of the company he’s currently working for.  The agreement could also specify particular types of employers and/or particular types of work that the worker isn’t allowed to do.  If the employee will be doing marketing for a bank, the employment contract could specify that the worker isn’t allowed to do any marketing for other banks within a 15-mile radius.

Non-compete agreements are not enforceable in all states because they make it hard for workers to find jobs and because some states consider them to be unlawful restraints on trade.  However, in Maryland, non-compete agreements are generally enforceable as long as the contracts are reasonable in scope, place, and duration.

While a contract might legally compel a bank marketing executive not to do marketing work for another bank within a 15-mile radius for a one-year period, an agreement that prohibited a marketing professional from doing any kind of marketing work for any company nationwide for the next decade likely would be considered much too broad to be an enforceable agreement.

One of the key factors that matter is whether the limitation on competition is reasonably necessary in order to protect the employer’s business. Another key factor is whether the hardship the agreement imposes on the employee is reasonable.

There are other criteria for a non-compete agreement to be enforced as well, such as a requirement of adequate consideration – which means the parties must have exchanged something of value.  Because it can be complicated to determine if a contract is within the bounds of the law or not, it’s a good idea for employers and employees to have a Baltimore non-compete attorney look over any non-competition agreement to provide insight into its legality and implications.  Contact an experienced attorney soon as possible if you are asked to sign a non-compete or if you want your employees to sign one. Call the Law Firm of J.W. Stafford, L.L.C. at 410-514-6099 or contact us online to schedule a confidential consultation.