When Are Non Compete Agreements Not Enforceable

Non-compete agreements are legal contracts that prevent employees from working in a similar field or starting a similar business as their current employer for a certain period of time after their employment ends. While these agreements can be useful for protecting intellectual property and trade secrets, there are times when they are not enforceable. Here are some situations when non-compete agreements are not usually enforceable:

1. Geographical restrictions are too broad. Non-compete agreements that cover a large geographic area may not be enforceable, especially if they extend beyond the employer`s actual business interests. For example, if a company has only one location in a particular city, a non-compete agreement that restricts employees from working in the entire state may be considered too broad.

2. Time restrictions are too long. Non-compete agreements that restrict employees from working in a similar field for an excessively long period of time may not be enforceable. Courts generally consider non-compete agreements with time limits of more than two years to be overly restrictive.

3. The scope of the restriction is too broad. Non-compete agreements that restrict a former employee from working in any capacity in a similar field may not be enforceable. For example, if a company produces software for a specific industry, a non-compete agreement that restricts an employee from working in any software-related job may be considered too broad.

4. The employee is not receiving adequate consideration. Non-compete agreements must be supported by consideration, which is something of value given in exchange for the employee`s promise not to compete. Adequate consideration can include salary, bonuses, or other benefits. If an employee is not receiving adequate consideration for signing a non-compete agreement, it may not be enforceable.

5. The non-compete agreement is against public policy. Non-compete agreements that are against public policy, such as those that prevent employees from using their skills or knowledge in a certain field, may not be enforceable. Laws vary by state, but most courts will not enforce non-compete agreements that are overly restrictive.

In conclusion, non-compete agreements are useful for protecting an employer`s intellectual property and trade secrets, but they must be carefully crafted to be enforceable. If you are an employee asked to sign a non-compete agreement, it is important to carefully review the terms and consult with an attorney if necessary. Similarly, if you are an employer, it is important to ensure that your non-compete agreements are legally enforceable and do not overly restrict your employees` ability to earn a living.