If you have a non-competition agreement (also known as non-compete) with your employer, it’s important that you understand the information which can be used to legally destroy the agreement. Here are factors the courts here in Connecticut use to analyze non-compete agreements.
1. Employee Must Have an Intention to Enter into Non-compete Agreements
No one can make you sign an agreement. An employee must intentionally and voluntarily consent to entering into a non-competition agreement. But why would any employee ever want to do that. These agreements are one sided and only protect the employer. If your employer forces you to sign an agreement under threat of termination, you do have rights. Once you leave and work for a competitor, your old employer may come after you. You can successfully argue that the non-competition agreement was a sham or a take it or leave it agreement. Again, why would you ever want to enter this type of agreement? Courts routinely relieve employees from non-competition agreements here in Connecticut based on this argument.
2. The Non-compete Agreement Must Be Reasonable in Duration
Every non-competition agreement must be reasonable in duration of time. We have seen compete periods of up to five years. Courts in Connecticut have held that one and two year limitations are reasonable. However, this is only one factor in the court’s analysis and it is not dispositive.
3. The Non-compete Agreement Must Be Reasonable in Geographic Area
Every non-competition agreement must be reasonable in geographic scope. Larger employers set the geographic scope to be worldwide and nationwide. Smaller employers use more localized areas such as 15 miles from each office, an example would be a real estate office. The Courts here in Connecticut will analyze this as one factor, but it is not the controlling factor. Courts will not enforce a non-compete if the company has several offices in Connecticut and restricts employees to 15 miles from any office in Connecticut; effectively barring employment in Connecticut. William Raveis Real Estate is a company that uses this type of non-compete geographic scope. Recently, the Court informed Raveis that this form of agreement is unenforceable.
4. The Non-compete Agreement Must Not Limit the Employee’s Ability to Work
The biggest factor in whether a non-compete would be enforceable is whether the agreement limits the reasonable ability of the employee to obtain work in his or her chosen profession. If the agreement is too lopsided in favor of the employer, Courts here in Connecticut will void the agreement. Courts typically review the protections afforded the employer to protect against competitive behavior versus the employee’s right to work and make a living. Each case is fact and context specific. The next item on the list provides the solution regarding the balancing of interests between the parties.
5. Strategy to Escape Non-compete Agreements
If the employer has a non-compete, we always look to determine if the employer enforces these agreements consistently. The employer’s burden is to show it consistently applies the agreement to everyone. But if some employees leave with non-compete agreements and start a competitive hedge fund in competition with their former employer, like Bridgewater Associates, Courts will deny protection to the employer. Go to the Connecticut Superior Court website and look up the employers actions to sue employees. Also ask around and see if other employees who have departed received nasty cease and desist letters when they went to work for a competitor. If they did not receive a cease and desist or were not sued in Court, this information becomes your leverage to argue your non-compete agreement is not legally enforceable.
The main argument we always use is that the employee never intended to enter the agreement, thus there was no legal consideration or glue to bind you to the agreement. This is a basic contract issue. You will need to draft a sworn affidavit that explains when you received the agreement, had little if any time to review it, did not consult an attorney, you could not negotiate the agreement and the employer conditioned your job unless you signed the agreement. We routinely send the signed affidavit to the employer along with a very detailed legal argument. Employers either forget the matter or try to push back with a cease and desist letter, assuming you went to work for a competitive employer. We will also file suit here in Connecticut against the employer to get the noncompetition agreement to be declared illegal and unenforceable.
Are you currently looking for help with a non-competition agreement or have other employment law questions? At Mark P. Carey P.C., our employment attorneys are here to provide information and help to all Connecticut employees.