New Year’s Resolution: Review Non-Compete
With the holidays around the corner, college football “Bowl Season” ramping up, and the singing of Auld Lang Syne within earshot, many employers not in the retail or travel businesses are wrapping up 2014 and preparing to start off 2015 with a strong first quarter. Some businesses shut down for the week between Christmas and New Year, understanding that many employees plan either to travel to family or to otherwise take long-saved vacation time. The New Year is sure to bring many changes. Congress will have a new look for at least another two years and the economic uptick across most industries not related to oil production is expected to continue to drive the economy forward in its recovery.
As a result, for most business leaders, the outlook for 2015 is positive. Employers also know that positive growth conditions can lead to competition among employers for the best employees. To complete the circle, competitive companies often court the most marketable employees during periods of economic growth. And so we get around to non-competition agreements and the question of whether or not your company’s non-competition agreement can give you a competitive edge when the economy’s opportunities call on your best and brightest.
To start with basics, it is important to understand that in almost all circumstances state law governs the legality and enforceability of non-competition agreements. In Florida, for instance, the legislature has penned a statute that defines the circumstances in which an employer can contractually restrain its current employees and the parameters that courts interpreting Florida law can use to determine the enforceability of a non-compete agreement. Not all states allow these agreements. Many states limit the agreements to certain professions.
Presuming you come from a state whose laws allow agreements that restrict the future employment of former employees, the end of the year is usually a great time to review the parameters of any in-place agreements and to work with your counsel to prepare an enforcement strategy… just in case. Keep in mind that non-competition agreements vary widely both in their complexity and in the length of their term. Some non-competition agreements allow the departing employee to essentially buy their way out of the restrictions. Others simply discuss an area and time frame in which the departing employee cannot compete.
However complicated your agreement, it is always best to develop your enforcement strategy before an employee departs.