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

  • Arkansas Enacts Noncompete Law: Employment Law Manual Updated, Legal Timetable Entry Added

    Date:
    15 April 2015
    Type:
    Editor's Choice

    Arkansas has enacted a law that addresses when covenants not to compete would be enforceable in an employment relationship.

  • Date:
    14 April 2015
    Type:
    Legal Timetable

  • Arkansas Enacts Noncompete Law

    Date:
    14 April 2015
    Type:
    News

    Arkansas has enacted a new law that clearly explains when covenants not to compete, or noncompete agreements, would be enforceable in the context of an employment relationship.

  • Terms of Employment: Arkansas

    Type:
    Employment Law Manual

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

  • Multistate Employer

    Type:
    Employment Law Manual

    Multistate employers face the challenge of complying with not only federal laws, but also differing state and local laws. This section highlights some of the states' differences in terms of preemployment testing and background checks, noncompetition and nonsolicitation agreements, and discrimination, pay and leave rules.

  • New York Appellate Court Refuses to Enforce Covenant Not to Compete: Employment Law Manual Updated

    Date:
    04 March 2015
    Type:
    Editor's Choice

    A New York appellate court has refused to enforce the provisions of a noncompete agreement based on an employer's prior breach.

  • 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: 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.

  • Terms of Employment: Oklahoma

    Type:
    Employment Law Manual

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

  • Terms of Employment: Texas

    Type:
    Employment Law Manual

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

About this topic

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