If a non compete clause is included in an employment contract, and that contract is later terminated (by the employee leaving, or being dismissed) – how is the non compete enforceable when the contract that contained it is terminated?
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In any contract, you can describe certain sections which are specifically called out as continuing even if the rest of the contract is terminated. So the non-compete clause would be specified as something which remains in force for a certain period of time even if the employment contract is terminated.
Alternatively, I’ve sign confidentiality agreements and non-disclosure agreements with employers as separate agreements. I remained an at-will employee (e.g. without an employment contract) but was still bound by those agreements. I suspect you can also be asked to sign a non-compete agreement separately, although there are limitations on how long such agreements can run.
I’m a national sales rep for a company that manufactures *something* used in small to medium scale manufacturing and I sell exclusively into distribution. The ones I’ve seen and heard about are signed at the beginning of employment and the terms extend beyond the termination of employment, usually for 1 to 2 years but more in some cases. Basically, you sign a contract not to do business in any capacity with certain entities until the end of the term agreed to.
I’m a national sales rep for a company that manufactures *something* used in small to medium scale manufacturing and I sell exclusively into distribution. The ones I’ve seen and heard about are signed at the beginning of employment and the terms extend beyond the termination of employment, usually for 1 to 2 years but more in some cases. Basically, you sign a contract not to do business in any capacity with certain entities until the end of the term agreed to.
I’m a national sales rep for a company that manufactures *something* used in small to medium scale manufacturing and I sell exclusively into distribution. The ones I’ve seen and heard about are signed at the beginning of employment and the terms extend beyond the termination of employment, usually for 1 to 2 years but more in some cases. Basically, you sign a contract not to do business in any capacity with certain entities until the end of the term agreed to.
In any contract, you can describe certain sections which are specifically called out as continuing even if the rest of the contract is terminated. So the non-compete clause would be specified as something which remains in force for a certain period of time even if the employment contract is terminated.
Alternatively, I’ve sign confidentiality agreements and non-disclosure agreements with employers as separate agreements. I remained an at-will employee (e.g. without an employment contract) but was still bound by those agreements. I suspect you can also be asked to sign a non-compete agreement separately, although there are limitations on how long such agreements can run.
In any contract, you can describe certain sections which are specifically called out as continuing even if the rest of the contract is terminated. So the non-compete clause would be specified as something which remains in force for a certain period of time even if the employment contract is terminated.
Alternatively, I’ve sign confidentiality agreements and non-disclosure agreements with employers as separate agreements. I remained an at-will employee (e.g. without an employment contract) but was still bound by those agreements. I suspect you can also be asked to sign a non-compete agreement separately, although there are limitations on how long such agreements can run.
Because the employment was terminated, not the contract. It’s just that simple. The contract has a life beyond the employment period.
Non-compete clauses are unenforceable in California unless it is related to selling a business. There are several other states where they may not be enforceable.
Because the employment was terminated, not the contract. It’s just that simple. The contract has a life beyond the employment period.
Non-compete clauses are definitely unenforceable in California. Unlimited non-compete clauses (saying you can never, ever for the rest of your life work for your employer’s competitors anywhere on earth) are also probably unenforceable anywhere in the United States. In any State of the United States with fair trade practices legislation that prohibits restraint-of-trade (which is to say, most likely all of them) a lawyer could argue the clause is “void as against public policy” (meaning it violates the fair trade laws).
HOWEVER, if a non-compete clause is given a reasonable scope (time limit and territorial limit) AND specifically references some proprietary information provided by your employer to do your job, they might be enforceable.
For example, let’s say you are in sales, and you employer gives you a customer or sales contact list. That’s information that took some work to get. It has a value which can be enforced either in contract or by using a statute that prohibits misappropriation of trade “secrets” (which means it’s not void as against public policy).
So if you non-compete clause says “you can’t quit and then go to a competitor and use our contact list to find customers for six months in the Tri-Cities Area” a court *might* find that enforceable.
And it doesn’t take a genius or a law degree to see why: your former employer isn’t enforcing some random contractual bullshit intended to harm its competitors by making talented employees unavailable (unfair trade practice) but rather preventing you from *stealing* valuable information from the company. Big difference.
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