Overview: One type of employment contract is the noncompete agreement. A noncompete agreement prevents an employee from pursuing a similar profession or trade in competition against the employer (usually post-employment). Noncompetition agreements are used to discourage an employee from working for a competitor using the specialized knowledge, skills, or confidential information gained while working for the employer.
The majority of the states recognize and enforce various forms of noncompete agreements. Generally, the terms of a noncompete agreement will only be enforced to the extent necessary to protect the employer's legitimate business interests. Most states will enforce a noncompete agreement if contains reasonable limitations as to the geographical area and time period in which an employee may not compete with the employer.
Trends: A few states have enacted legislation requiring employers to provide employees with a copy of the noncompete agreement prior to or concurrent with making an employment offer or an offer of change of job classification. If an employer does not comply, the agreement may be unenforceable, exposing an employer to unwanted competition.
Author: Melissa A. Silver, JD, Legal Editor
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