Can an employer ask you to sign a non-compete after you've started working for them and punish you for not?

Question

My employer has asked me to sign a non-compete agreement that was not part of my initial hiring procedure more than a year ago. After consulting with a lawyer I decided that it was too restrictive and not worth the stock they were offering as a carrot. Now they've said I'm not eligible for promotions or bonuses that I've earned because of my refusal to sign.

Is this policy legal? Thanks!

Answer 1

Sure it is....you have discovered that they can play hardball harder.

They can change your pay structure however they want...all they have to guarantee you is minimum wage.

However, I do sympathize with you. Homebanc (now out of business) used to require their loan officers to sign a 5-year non-compete clause upon hiring...so even if they fired you, that meant that you couldn't work for another mortgage lender for 5 years, or they could sue you for $60K...essentially, barring you from your own industry.

Only idiots, signed those agreements.

I would just smile and nod, and then quietly look for another job.

PS: To Lain...her post said that she did talk to an attorney about it and he advised her NOT to sign. The company that she is employed with never brought up a non-compete agreement until a year into her employment....not every company has these, so she had no reason to ask about them if the company didn't even mention that they had one.

A good company mentions these before they even schedule an interview.

Not her fault...she did everything she was supposed to do.

Answer 2

The lesson here is that you must negotiate a non-competition agreement before you start your employment, not when you are ready to end it. Otherwise, you may not be able to make your next career move.
The law of non-competition agreements tries to do what is fair: restrict the employee's freedom to compete just enough to enable the employer to protect its business interest. In other words, if it would not be fair for you to take advantage of an employer's training or investment, a court will allow the employer to protect that training or investment.

Courts have traditionally frowned upon restrictions placed by employers on their employees' right to find and make a living. However, courts will enforce non-competition agreements if: the employer proves that it has a legitimate business interest to protect by restricting its employees' right to compete against it; the restriction on the employee's right to compete is no greater than that necessary to protect the employer's business interest; and the covenant not to compete is supported by consideration, meaning that the employee received something in exchange for it.

You should really contact a lawyer about this.

Answer 3

Yes it is. They aren't required to promote you, so they can decide what the criteria are for being eligible for a promotion. Same for bonuses unless you have a contract that says otherwise.