I signed an employment agreement in January 2004 that included a noncompete clause that states I cannot own, manage, or "act in the capacity of an employee... of any enterprise engaged directly or indirectly in the business of..." within a 250 mile radius for 1 year after I leave.
I've been offered a position with a competing company in an administrative support role. The two companies don't actually compete because one is extremely frou-frou high-end that attracts one type of client, and the other slash-and-burn in the trenches that attracts another type. They would never actually be competing for the same work even though it's all called the same thing.
If I took the job, is this clause REALLY enforceable? I know ethically it should be, and I understand the spirit of it, but what could they really do if I jumped ship for a corner office watching people do the work I am currently doing rather than actually doing it myself?
2006-10-09 15:41:18 · 9 answers · asked by misslabeled 7 in Politics & Government ➔ Law & Ethics
The state is Texas
2006-10-09 15:45:39 · update #1
Generally speaking, yes, it's enforceable. It also appears this clause was tailored to be enforceable.
While non-compete clauses are generally disfavored as a matter of public policy, they can be enforced if narrowly drawn. The main considerations are duration, geographical area, and the type of activity restrained. The one year limitation and 250 mile radius would likely make this clause enforceable. The only way out I could see would be to argue that your new employer is not really in competition with your old employer. However, simply competing for a different class of client for the same good or service is unlikely to put you in the clear.
As far as what your old employer could do, they could sue you. The possible damages would be any monies they claim the new business might make that you otherwise might have brought to the old employer. This is somewhat nebulous, but it is proveable.
That said, the move might still be worth your while, but be aware of the possibilities. Consult a lawyer on this, because you may need to defend a lawsuit. It's not cheap, but, again, it may be worth it.
2006-10-09 15:49:53 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Your first paragraph answered your own question, you signed an agreement to not "own, manage, or "act in the capacity of an employee... of any enterprise engaged directly or indirectly in the business of." Yes, noncompete clauses are fully enforceable. They can force you to look for another job and pay a fine for violating the clause. Best thing to do is to explain to your current company the situation, and if they truly do not compete for the same clients, have them do a waiver of the noncompete clause for the purpose to work for the other company.
2006-10-09 15:49:11 · answer #2 · answered by Jim T 4 · 1⤊ 0⤋
The test in Texas (as in many states) of whether a non-compete is enforceable is whether it is reasonable in scope and duration. Some states balance the non compete against whether you have other employment opportunities, and whether the clause was something bargained for, or whether it was forced upon you.
One year and 250 miles may very well be deemed reasonable, depending upon the type of work you did, and whether you had access to trade secrets of your previous employer, including customer lists.
Discussing the matter with a local attorney who specializes in employment law (and there are many in both Dallas and Houston) should get you a decent read on the latest rulings from the 5th Circuit Court of Appeals and the Texas Supreme Court.
2006-10-09 16:55:15 · answer #3 · answered by Anonymous · 1⤊ 1⤋
I am an attorney in California. The laws on this type of thing vary by state, so you really need to consult an attorney in your state. I will explain the law in California.
Noncompete clauses are difficult to enforce, at least in California. They are enforceable during employment and in conjunction with the sale of a business, but that is it. You can leave your job at anytime and open your own competing.
During your time of employment, you do owe your employer a duty of loyalty. That means you cannot talk to your employer's customers about leaving and forming your new company. You can PREPARE to compete while still working for your current employer (i.e. signing a new lease, getting letterhead and business cards, etc.), but you cannot solicit customers while still working there. You canno take anything with you like a rolodex.
I hope this helps. Contact a local attorney for more information.
2006-10-09 15:45:45 · answer #4 · answered by Carl 7 · 1⤊ 1⤋
It depends on the contract. I would talk to a lawyer. I had a friend who worked in sales, and had a non compete, She took a job with a direct competitor in the same market and her previous job took her to court. She won but with some stipulations for a 6 month period. I realize it's a bit different situation. But it does depend on your current employer and how they react, as well as how airtight the contract is. Good Luck!!
2006-10-09 15:50:48 · answer #5 · answered by jblonde 4 · 0⤊ 0⤋
no, it is not enforceable. You have the right to work where you want to work. There may be an issue if you were taking clients of theirs away from them, but even then it is a tough case for them. Non competes aren't worth much at all. You will be fine
2006-10-09 15:46:55 · answer #6 · answered by Parrot Bay 4 · 0⤊ 0⤋
Depends on the state. A state like CA would take it very seriously. A state like AZ wouldn't. Either way, the previous employer could sue you for breach of contract (I know, I've been there), but most likely it won't go anywhere. It's mostly a scare tactic.
2006-10-09 15:44:57 · answer #7 · answered by Chris J 6 · 0⤊ 0⤋
You might get away with it in Texas - and 250 miles is quite a large area - but, then again, so is Texas.
Run it past a good corporate/contract lawyer. It WILL be worth it.
2006-10-09 16:13:40 · answer #8 · answered by 34th B.G. - USAAF 7 · 0⤊ 0⤋
Yes they certainly are enforceable.
2006-10-09 15:44:52 · answer #9 · answered by Anonymous · 0⤊ 1⤋