When it comes to restricting competition, every state has a slightly different approach, and non-compete agreements are no exception. Non-compete agreements are usually created with the idea of trying to prevent unfair competition between an employee and the employee’s former company for a period of time after the employment relationship is terminated.
Most companies don’t want their recently fired (and possibly disgruntled) employees going to work for their competitors. This is because there is a strong possibility of such employees using their business skills and knowledge of their former employer’s operations against that employer. Preventing competition for a period of time after termination allows the employee to cool off a bit and prevents that employee from immediately trying to go and work for a competitor and win away their former employer’s customers.
Many states seek to limit the enforceability of non-compete agreements because they are seen as overly severe restrictions on competition. These agreements can make it near impossible for employees to find more work after being let go. Non-compete agreements often prevent employees from working in the same industry as their former companies. If they have spent their entire careers developing their expertise and skills in that particular industry, then such employees will be effectively foreclosed from finding any comparable work on similar pay.
Also, many states have policies of limiting these agreements to only certain types of professions. This is because such states view these professionals as vitally important to their state and want to ensure that those specific professionals are able to freely find work and change employers when needed.
See the list below to determine whether non-compete agreements or clauses are enforceable for none, some, or all types of employment relationships controlled by the laws of your state. Where specific professions are listed, only those professions are exempted from being bound by non-competes in that state and non-competes are likely still valid for all other professions not listed. Note that even if non-competes are not enforceable in your state or against specific professionals you employ, your state will still likely allow you to execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
Also, just because a state generally enforces these agreements does not mean that all non-compete agreements will be enforced. Any agreement could still be invalidated if a court finds that the limitations imposed are not reasonable. Courts often will not enforce non-competes if the duration of the non-compete is too long, if the geographic scope where the employee is prevented from working is too wide, or if the types of work being prohibited are too broad.
If your state is not listed, then non-compete agreements are generally enforced in your state.
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