Employees may be asked to sign a noncompete agreement that prevents them from seeking employment with another organization that directly competes with their current employer.
It is usually signed before an employee beings work, but doesn’t take effect until after the employee leaves the organization. Employers may ask an employee to sign a noncompete agreement in order to protect the organization’s trade secrets or other proprietary information.
Courts sometimes view noncompete agreements as a restriction on the employee’s right to earn a living, so there are certain elements that must be included in the agreement.
In North Carolina, for a noncompete agreement to be valid it must be in writing, part of an employment contract, must be reasonable in time, scope and geography, must be supported by consideration and must protect a legitimate interest of the employer.
When an employee signs the agreement before beginning work, the employment itself is valid consideration. However, if the employee is asked to sign the agreement after he or she begins work, the employee must receive additional consideration like a promotion, pay increase or bonus.
Business interests and burden
If a noncompete agreement becomes part of a legal dispute, the court will likely balance the employer’s business interests with the burden the agreement places on the employee.
There are several factors that may be taken into consideration to determine this, but it depends on the services the business provides. For example, the agreement could not prevent the employee from working in an area where the employer does not do business.
If the court finds that the agreement is too broad, it may limit the scope and duration of the agreement.
An experienced attorney can help businesses draft and enforce noncompete agreements and can also help employees who need assistance understanding the terms of a noncompete agreement they have been asked to sign.