The Top 5 Reasons an Employer Will Enforce Your Non-Compete Agreement
Non-compete agreements are a common part of the business world these days. But just because you sign a non-compete agreement doesn’t mean your employer will enforce it (or try to enforce it) after you leave your current job. I’m an employment lawyer and one of the questions my individual clients ask me most frequently is not whether a non-compete agreement is enforceable (which is typically a fairly complex legal question to answer) but whether the former employer will try to enforce it. While I can’t consult a crystal ball to answer that question, many years of litigation – and threatened litigation – in this arena actually provides some insight into potential enforcement triggers. Here are those reasons, in reverse order.
Reason number 5: The Market Was Declining Where You Were Working
This seems counterintuitive but in fact a business losing market share (and customers as well as employees) may try to keep that business through the legal process. Keeping a seasoned and effective salesperson from working for a competitor may in fact be one way to shore up a business. This is something over which you as the former employee have no control. But you should be aware of it before you make the decision to move to a competitor.
Reason number 4: The Market Was Growing Where You Were Working
Yes, this directly contradicts reason number 5, but in my experience, a hot market can also provoke the enforcement of a non-compete agreement because the business is interested in bolstering (and containing) its client base as a way to grow the business. In fact, a business might be more likely to pursue enforcement in a hot market because the business might be flush with cash necessary to make a litigation investment worthwhile.
Reason number 3: You Are Good at What You Do
Some employers may mistakenly believe that the employer owns the skills and knowledge an employee develops during the employee’s career with the employer. That is not the case (for more on this issue, see my October 28 LinkedIn post here). But that doesn’t mean that a former employer will not try to make that case in court. Some employers also use the litigation process to buy time to shore up a client base. Either case could be costly to you, even if you end up winning the case.
Reason number 2: You Took Your Employer’s Property
This is one of the chief reasons a business will go to court to enforce a non-compete agreement (as well as other legal rights). But this reason also provides the easiest way to avoid litigation. It is common practice these days for a business to review an employee’s digital activities after (or before) the employee departs. Transmittals to your personal email account from your employer’s email system the day before your departure almost always results in DEFCON 1. Take nothing from your former employer that isn’t clearly and purely personal. And when in doubt, don’t take that either.
Top Reason Your Non-Compete Will be Enforced: The Customer Calls and Mentions How Nice It was to Have Heard from You ….
Nothing motivates an employer more than a call from a longtime customer describing in detail the customer’s conversation with you, the employer’s former top salesperson. In fact, in my experience, this is a surefire way to provoke your ex- employer to do something – anything in fact – to stop you. While the agreement you signed might not even be worth the paper it is printed on, it won’t matter to your former employer, who will stop at nothing when this call comes in. To be sure, this isn’t necessarily a reason to avoid changing jobs or pursuing sales in your old territory. But you and your new employer should get solid legal advice about what to do (or what not to do) to avoid making matters worse before your first day of work at your new job.[1]
[1] This article is not legal advice –you should consult a qualified and licensed professional who practices in the relevant field for legal help.
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