Business law might look simple at first glance, but it’s far more complex than it appears. Non-compete agreements are such an area.
“While it might seem simple enough to draft up an agreement that Joe X is not to compete in the industry in which he is employed for 3 years after being let go or leaving his place of work, it’s not that simple when such an agreement is actually crafted and drafted,” said Deborah Barron, of the Barron Law Office in Sacramento, California.
It’s quite usual to find the a vast majority of businesses have some kind of trade secret they don’t want let out of the bag. Generally speaking the upper management keeps this kind of knowledge pretty hush-hush, after all business strategies, the elite client list, a new prototype in development, and what’s new for the future are things best kept in-house. Companies want to protect this kind of information, but some employees have to be given access to this information in order to do their jobs.
The way the happily ever after story goes is that the employee stays with the company until retirement and becomes a part of the management team. In reality, chances are the employee will either be fired or quit and make a beeline for the competition, who would love to get their hands on business secrets. To try and avoid this somewhat disastrous consequence when people leave a firm, the non- compete agreement comes into play.
“In plain English, the non-compete agreement spells out that the party in question (the employee) must not compete with the firm from which they are leaving for a certain period of time. This would deal with someone who wanted to leave a company and take the business secrets they know to another company,” Barron added.
While this might sound like a slam dunk and a simple solution, non-compete agreements have a drawback because of their restrictive nature. Businesses have every right to protect their secrets, but workers have a right to work. What happens now?
“That tends to depend on the state,” commented Barron. “In other words, some state courts will enforce non-compete agreements and in others, the courts lean toward an employee’s right to work. Knowing what the law says in the state where the business is headquartered and the worker works is the key to understanding whether or not a non-compete agreement may be enforceable or not,” concluded Deborah Barron, of the Barron Law Office in Sacramento, California.
Deborah Barron is a Sacramento business lawyer, Sacramento employment lawyer, and Sacramento winery lawyer in California. To learn more, visit Lawbarron.com.
