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The modern world of work has made non-compete clauses very common. Such clauses restrict employees from working with competitors for a specified period of time after leaving their job. Unfortunately, such clauses are now being indiscriminately abused to control employees.
Consider the situation in New York city. Here, many high-corporates and legacy establishments are now increasingly requiring non-compete agreements. These are designed in the sole benefit of the organization, and thus jeopardize the life of an employee should they choose to leave. Under employment law, such blatant controlling is illegal. In fact, here are the key factors that must be checked for a non-compete clause to even be considered…
Protecting Employer’s Legitimate Business Interests
Employers often require non-compete clauses to safeguard their legitimate business interests, such as trade secrets, customer relationships, and proprietary information. These clauses help prevent former employees from using sensitive information to benefit a competitor. For example, a sales manager with access to client lists might be restricted from joining a rival firm to protect the original employer’s market share. While this protection is important, the clause must be carefully drafted to ensure it doesn’t excessively restrict the employee’s career prospects.
Should Not Impose Undue Hardship on Employees
A key consideration in enforcing non-compete clauses is that they should not impose undue hardship on employees. Clauses that are too restrictive can prevent individuals from finding suitable employment, effectively barring them from their chosen profession. For instance, a clause that restricts an IT professional from working in the entire tech industry within a large geographic area for several years would be considered unreasonable.
Reasonable in Time Period and Geographic Scope
For a non-compete clause to be enforceable, it must be reasonable in terms of its duration and geographic scope. This means the restriction should only last as long as necessary to protect the employer’s interests and be limited to the geographic area where the employer competes. For example, a one-year restriction within the same city might be reasonable, but a five-year global restriction likely would not be.
It’s not difficult to understand the logic powering non-compete clauses. An opportunistic employee with enough willingness can significantly debilitate an organization with internal knowledge. Such clauses start becoming a problem when the employee is effectively blocked from seeking any and all employment for years on end. In such a case, it’s essential to involve professional attorneys! These are experts who can understand the exact contract, and accordingly ensure the employer is brought to justice for enforcing a potentially illegal contract.
