Many companies make their employees sign contracts when they’re hired or during their employment. The contracts often say the employee can’t work for a competing business for a certain period of time after being terminated from the company–a “noncompetition clause.” These provisions generally have three parts: time limit, geographic scope, and prohibited activities.
Courts generally review noncompetition clauses by asking the question, “Is this reasonable?” on a case-by-case basis. If you’re a software developer, and your noncompetition clause says you can’t work for any competitor anywhere in the world in any job (even as a janitor), a court probably won’t enforce it. If it says you can’t write code for the company’s main competitor across the street for the next six months, that’s a different story. Every noncompetition clause is different, and every job is different.
These contracts often say that you can’t take secret information from the first company and use it at the second company. These confidentiality clauses are usually valid, but you also have the right to work elsewhere using the skills and general knowledge you learned while working for the first company.
The contract may also have a “nonsolicitation clause” that bars you from trying to hire the company’s employees for a certain period of time. These clauses are also usually valid, but courts analyze them using the same time/geography/work approach, and if the provision is too broad, some courts will entirely refuse to enforce it.
We can analyze your employment contract, compare it to others that the courts have reviewed, and tell you whether it’s worth fighting. If you would like to schedule a consultation, please contact us.