You may have a successful career in a large company in the big city, but as time goes on you want to leave your current employment to work for a smaller company such as one in the Haddonfield area. When this happens your new employer may want you to sign a non-compete agreement. Before signing it is important that you understand how a non-compete affects your rights as an employee. The following is a basic overview of non-competes in the U.S. and how the landscape regarding the use of non-competes may be changing.
How do non-competes work?
A non-compete is an employment contract as well as a restrictive covenant. Generally, non-competes restrict a person’s ability to work in a certain geographical area for a certain amount of time if they leave the company. Employers use non-competes to keep departing workers from using the skills, information or clients they picked up during their employment for the benefit of a competing employer. If a non-compete is violated the worker may be sued.
Restricting the reach of non-competes
Non-competes are not enforceable in three states: California, Oklahoma and North Dakota. Several other states, including New Jersey, limit who a non-compete can be used for or otherwise limit the scope of non-competes. The Biden Administration issued an Executive Order on July 9, 2021, that aims to curtail the use of non-compete agreements when doing so would unfairly place limits on the ability of a worker to get a job. In addition, a bill has been introduced in Congress called the “Workforce Mobility Act of 2021” that would limit the use of non-competes, educate the general public about non-competes and give workers the right to file a lawsuit if the Act is violated by their employer.
Learn more about business law
Non-competes are just one type of agreement that may be presented in an employment contract. Whether they are enforceable currently depends on which state you live in although that one day may change. This post is for educational purposes only and does not contain legal advice. Our firm’s webpage on business law may be a good starting point for those who want to learn more about their rights and options.