Use of noncompete agreements on the rise

As the economy improves, people may consider leaving their current employer for better job prospects, upward mobility, higher pay or countless other benefits. However, individuals contemplating working for another company may first want to make sure they did not sign a noncompete agreement with their current employer. This document often prevents people from going to work for a competitor.

There is no specific statistic available on how many companies require their employees to sign noncompete agreements, but their use is becoming more common and they aren’t just limited to executives. In some cases, Louisianans who breach the terms of their noncompete agreements potentially face legal action and may be sued for damages by their former employer.

Some argue that such agreements are necessary to protect a company’s trade secrets and prevent people from sharing sensitive information about their former employer with their new employer. However, others argue that noncompete agreements stifle economic growth by preventing a talented workforce from seeking better opportunities. Many workers may be able to get out of such agreements through litigation if they were not granted enough time to go through the terms of the contract with their attorney, or if they did not understand what they were signing on the first day of their job.

Even though most states enforce noncompete agreements, many states are reexamining their enforceability. Some are proposing legislation to make such agreements unenforceable in certain circumstances, such as a minimum length of stay with a company before the noncompete applies or making it unenforceable when a person applies for unemployment.

In a competitive job market, it is important for businesses to protect their trade secrets and retain a talented workforce. At the same time, it is also important for workers to have freedom to work for whom they please without broad restrictions. When questions about noncompete agreements or employment law arise, both employers and employees can work together to negotiate the terms of the contract. Understanding employment litigation is crucial for both businesses and individuals; an experienced employment law attorney can assist employers and employees in this task.

Source: Market Watch, “More firms requiring non-compete agreements,” Jonnelle Marte, July 8, 2013