HR Support on Noncompete Agreements

Editor's Note: Use noncompete agreements and stay ahead of the competition.

Melissa A. SilverOverview: 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: Last year, the Wall Street Journal reported that there has been a 61% increase since 2002 on the number of court decisions involving noncompete agreements. However, this number was based only on published decisions and did not take into account cases settled out of court or unreported decisions. Although employers enforcing noncompetes may be accomplishing their goal of discouraging employees from starting up a rival company, the practice may have the unintended effect of stifling innovation (especially in the high tech industry). In fact, in pursuit of economic development, innovation and entrepreneurship, the Governor of Massachusetts supports the elimination of noncompete agreements.

Author: Melissa A. Silver, JD, Legal Editor

Latest items in Noncompete Agreements

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    Type:
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    In-depth review of the spectrum of Oklahoma employment law requirements HR must follow with respect to terms of employment

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    Type:
    Employment Law Manual

    In-depth review of the spectrum of Texas employment law requirements HR must follow with respect to terms of employment.

  • Terms of Employment: Delaware

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Delaware employment law requirements HR must follow with respect to terms of employment.

  • Employee Discipline: Delaware

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Delaware employment law requirements HR must follow with respect to employee discipline.

  • Employee Discipline: New York

    Type:
    Employment Law Manual

    In-depth review of the spectrum of New York employment law requirements HR must follow with respect to employee discipline.

  • Terms of Employment: Louisiana

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Louisiana employment law requirements HR must follow with respect to terms of employment.

  • 11th Circuit Rules on Noncompete Agreements: Employment Law Manual Updated

    Date:
    18 July 2014
    Type:
    Editor's Choice

    The ruling in Dawson v. Ameritox, Ltd, confirms Alabama law that an employer-employee relationship must exist at the time a noncompete agreement is executed.

  • Terms of Employment: Indiana

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Indiana employment law requirements HR must follow with respect to terms of employment.

  • Terms of Employment: Virginia

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Virginia employment law requirements HR must follow with respect to terms of employment.

  • Kentucky Supreme Court Ruling on Noncompete Agreements: Employment Law Manual Updated

    Date:
    26 June 2014
    Type:
    Editor's Choice

    A Kentucky Supreme Court ruling affects the validity of noncompete agreements if they are signed after an employee commences employment.

About this topic

Guidance for HR on the use of noncompete agreements to prevent employees from competing with the employer.