Non-Compete. Enforceable?
 

Required to sign a non-compete (sales management role) that says can't work in same industry/product line for several months after leaving. Are these enforceable?

Everyone I've asked said no, but may be in a situation to find out. It's the only field in which I have extensive experience and marketability. Appreciate thoughts from the brain trust.

They are typically not enforceable. Restrictions on not using customer lists and similar information should be enforceable.

Yes and no. Usually a "ban" from an industry is NOT enforceable. A ban from contacting former customers and soliciting them for business is enforceable for a time.

The reality is that a company will usually not be willing to hire and attorney and go through the costly and lengthy process to sue you. Cease and desist letters may be sent but there will likely be no bite behind the bark.

NOW..if the company is large with attorneys on staff, they may make it hard on you if you solicit your former customers right away.

Use common sense and do the right thing...take care of your family and be ethical and you will most likely have no issues.

I recently went through this. I found this websit really good, plus it has a link to some new laws in Georgia.

Is Your Non-compete Agreement Enforceable? | HR Examiner

They can't prevent you from earning a living.

Typically if a former employer wants to enforce one cheaply they will compensate you for the time you are not working.

I'd be leaving a very large company with a staff of lawyers. Georgia appears to be tougher than some states. Is the law based on location of employee, old company HQ or new company HQ?

I would absolutely respect confidentiality and even non-solicit, but new opportunity is directly competitive. I suspect my current boss would take it personally and encourage enforcement. Worth spending a few bucks to talk with an attorney?

Spend a little now to possibly not spend a lot later is never a bad idea.

Atty will never give you a concrete answer on that.

Because there isn't one.

My firm won't hire from competing firms in the immediate area. Non-compete or not. It's a 'do unto others' thing.

That said when I investigated the issue I found that judges typically look to the reasonableness of the agreement. That is to say if it prohibits you from similar employment within 200 miles it may be tossed whereas a 20 mile radius type thing might be considered reasonable.

Thanks Beretta. In this case it's a national function for both companies. Guess it's probably worth talking to a lawyer to get advice on how to navigate the process should things unfold in that direction.

I've learned from a few folks that I used to work with (also at a large company with its own legal staff) that much depends upon the circumstances of your departure. If they let you go, then it's pretty much unenforcable. Some former employees of my company have won significant lawsuits in the past concerning this. On the other hand, if you quit, it does get a bit murkier. Of course leaving one company to secure a higher paying job at another is the "American way", but if your former employer can "prove" you got the other job based solely upon knowledg gleaned from them, it can get pretty ugly... Sharing proprietary information with the new employer is, of course, a strict no-no, but using general knowledge of the industry learned while at your former employer? They can't stop you. You have the right to advance your career and earn a living based upon your knowledge and experience.

I'm sure most companies do a cost/benefit analysis to see if its worth it to even try to enforce it. I guess it would come down to how valuable you are and is it worth it to try and stop you from joining a competitor.

I would also add that it depends upon the circumstances of why you signed the noncompete. Were you given anything in return for your signing? Was it required as part of your hiring contract? Basically, you must have received consideration for signing the noncompete. Consideration could be $$$ or just offering you the job. I've seen problems where someone is already employed and asked (told) to sign a noncompete. Just keeping your job is not consideration. A bonus for signing is consideration.

I just went through this too and started a thread on it a month or so ago.

Really depends on your state. In California, it is not enforceable. Buried in the non-compete that I signed years ago was a statement about not recruiting employees away. That is enforceable as is protecting intellectual property which encompasses many categories.

It doesn't cost a company anything to throw a worthless, unenforceable non-compete at new hires or tenured vets. Plenty of folks won't question them. My employer has a big sign out front that directly contradicts a state law and I'm sure they know it. But 99.9% of the people who see it probably think it's legit and so comply.

An interesting point. My offer letter included verbiage that said I would sign the company's standard t's and c's. But I never did it. 5 months later HR contacted me and said I must sign immediately. I did so and dated it as such. Not sure that matters.

Also, I'd received a signing bonus which would be paid back if I resigned since I've been there less than the required duration.

Do I proactively tell the prospective new employer about the non-compete and risk losing the opportunity? Or should I at least wait until I have an offer in hand? Thoughts?

As said above, varies state-by-state. A had a fellow co-worker decline a job offer because she didn't want to sign a non-compete. She wasn't even a manager.

Scooter is spot on, but we need more information on your situation.

Did you sign a blanket non-compete at a prior employer and are now seeking employment at a new employer? If so, you need to be very careful. If you don't disclose it prior to accepting their offer and resigning from your current position, you may find yourself unemployed. If this is the situation, I'm surprised the prospective employer didn't ask. Just because they didn't doesn't clear you of disclosure. Give us more details.

Still employed and yes, signed a blanket non-compete. Have only had two phone interviews with prospective new employer which went very well...they now want me to visit their HQ for face to face meetings. Hence my question.

It's a good opportunity, more money, etc. so I'd like to give it serious consideration. Just trying to understand the best way to proceed in light of this situation.

There are reasonable limits for no competes. The industry/expertise clause is generally not enforceable because you can't tell someone that they can no longer use their developed skill set. Generally the enforceable part would be in taking and using IP to a competitor... ...so just be careful that you tread carefully there. I've seen a lot of these and no judge has ever ruled that someone had to "change careers" as a result of leaving a company which yours basically says.

Will you have to move to take the new role? If so, that gives you a little wiggle room.

You need to disclose the non-compete to the new employer. They will probably ask you during your face to face interview. If they say it is not an issue after you disclose it, they should be willing to manage any action by your prior employer. I went after a chemical engineer for violation of a non-compete and the court upheld my rights as he had competitive information. His new company had to keep him in a non-competitive role and away from any facility that processed product within his specialty for two years, physically audited every quarter. That was in Indiana. Yes, they are enforceable.

Telling them about it is a bit of a tough call. I think that you should at least get the offer, but personally I would want to know. You don't want to start with them being pissed off about you. If they want you it shouldn't matter too much.

I'm sure they've dealt with this before, most professionals and mgmt. these days have to sign them.

Thanks guys...I have a call scheduled with their internal recruiter (HR) on Monday. I will discuss it with her at that time, and provide a copy if requested. As stated above, I don't want to waste their time...or my own, if this is a deal killer for them. It's not easy to disappear for a day or two to go through the interview exercise unless there's a reason to do so.

Would be really frustrating if I'm truly handcuffed by this thing.

Thanks again!