COMPETITION AGREEMENTS FAQ
WHY DO COMPANIES USE THESE AGREEMENTS?
They are used and misused. They are frequently used to ensure loyalty preventing an employee from joining a competitor, which is a misuse of the agreement as agreements should not be used simply to prevent competition. A proper use is to prevent unfair competition.
HOW CAN NONCOMPETE AGREEMENTS BE MISUSED?
Whether or not the agreement is ultimately enforceable, companies use the threat of litigation to compel compliance. Whether to comply or resist is therefore a business decision.
WHAT SHOULD I NOT DO BEFORE I LEAVE?
A duty of loyalty is still owed to your employer until you resign. This means that you cannot compete against your employer while you are still employed. Remember that if litigation is commenced, electronic discovery is both intrusive and revealing.
WHAT DOES AN EMPLOYER NEED TO SHOW TO ENFORCE A NONCOMPETE AGREEMENT?
The employer needs to show that the agreement must be enforced to prevent the misuse of confidential information. The employer has the burden of proof in showing not only that the information is proprietary, but also that adequate steps have been taken to protect its confidentiality.
IS AN AGREEMENT ENFORCEABLE IF SIGNED AFTER EMPLOYMENT HAS COMMENCED?
The short answer is yes. For more specific information, you should speak to an experienced employment law lawyer.