If you have a noncompetition agreement, it is not enforceable. Employers use noncompetition agreements mainly as a deterrence. In reality, employers know they are not enforceable and the courts feel the same way. People need to work and unless you are going to pay an employee not to compete, no court is going to enforce such an agreement. In my practice, I continually represent employees who have noncompetition agreements attached to equity compensation awards, employment and severance agreements and contained in employee handbooks. Employees never ask to receive a noncompetition agreement, but employers force employees to take the job and the noncompetition agreement together or leave it. Employees are never afforded any real opportunity to negotiate the agreement.
There are a few tactics to overcome noncompetition agreements. First, these agreements, like any contract, require œconsideration such as œcash or some other compensation to bind the agreement. In many states, like Connecticut, if the employer provides the agreement on the first day of work, then there is adequate consideration for the noncompetition agreement. However, in Connecticut, if the employer provides the agreement two, four or even six months after the start of employment, then there is no consideration for the agreement and it is unenforceable; Connecticut courts have fashioned a rule that continuation of employment is not valid consideration to bind the parties to an agreement.
Another creative and unused method to destroy a noncompetition agreement is the use of a sworn affidavit that is prepared for the employee prior to starting a new job with a competitive company. The affidavit will state in essence that the employee will not use confidential proprietary information at his new employer and will not poach or solicit former clients or former coworkers. The only remaining fact is the Employee so happens to work for a competitor. The affidavit ensures the former employer is protected and prevents it from waging litigation against the former employee. No court will issue a ruling forcing an employee from his or her employment when there is no demonstrated injury or potential injury to the former employer. I recommend the employee deliver the affidavit to the former employer before starting the new position or upon receiving a cease and desist letter from the former employer. This is a very inexpensive way to destroy the noncompetition agreement and prevent unnecessary litigation.
The final and more common method of destroying the noncompetition agreement is to demonstrate to a court at the start of litigation that the agreement is unenforceable because the time period is too long, or the geographic scope too large and/or that the employee is unable to earn a livelihood. Courts largely focus on the balance between the employee’s interest to earn a living against the employer’s interest to protect itself. Courts side with employees and refuse to enforce noncompetition agreements during difficult economic periods, most likely because judges feel reluctant to bar employees from active employment.
Say No To Noncompete Agreements At Work. If you would like more information, contact our employment attorneys in Connecticut and New York, Carey & Associates PC at 203-255-4150.