Post-Termination Non-Compete Agreements

Post-Termination Non-Compete Agreements: Are They Enforceable?

Many employers require their employees to sign non-compete agreements as a condition of employment. These agreements are designed to prevent employees from working for a competitor or starting their own business in the same industry after leaving the company. While non-compete agreements are generally valid and enforceable, there are certain restrictions that apply to post-termination non-compete agreements.

What is a Post-Termination Non-Compete Agreement?

A post-termination non-compete agreement is a clause in an employment contract that prohibits an employee from working for a competitor or starting their own business in the same industry for a specified period of time after leaving the company. This type of agreement is designed to protect the company`s trade secrets, customer relationships, and other confidential information.

Enforceability of Post-Termination Non-Compete Agreements

The enforceability of post-termination non-compete agreements varies by state and depends on several factors, including the duration of the restriction, the geographic scope of the restriction, and whether the restriction is necessary to protect the company`s legitimate business interests.

In general, courts are more likely to enforce non-compete agreements that are reasonable in duration and geographic scope, and that are necessary to protect the employer`s legitimate business interests. For example, a non-compete agreement that prohibits an employee from working in the same industry for a period of two years and within a 50-mile radius of the employer`s office is more likely to be enforceable than an agreement that prohibits an employee from working in any industry for a period of five years and worldwide.

On the other hand, courts are less likely to enforce non-compete agreements that are overly broad, unreasonable in duration and geographic scope, or that are not necessary to protect the employer`s legitimate business interests. For example, a non-compete agreement that prohibits an employee from working in any industry for a period of 10 years and worldwide is likely to be unenforceable.

Post-termination non-compete agreements are also subject to the doctrine of “blue pencil” in many states. This means that if a court determines that a non-compete agreement is overly broad or unreasonable, it may modify the agreement to make it more reasonable and enforceable.

Conclusion

Post-termination non-compete agreements are an important tool that employers can use to protect their trade secrets, customer relationships, and other confidential information. However, these agreements must be reasonable in duration and geographic scope, and must be necessary to protect the employer`s legitimate business interests. As a professional, it is important to ensure that post-termination non-compete agreements are clear, concise, and legally enforceable.