How to Get Out of a Non-Compete Agreement
How can I get out of my non-compete agreement?
Many contracts contain a provision called a “non-compete” or “restrictive covenant.” Maybe you glossed over it when you started your job, but when you decide it’s time to look for another gig, a non-compete can limit your options. According to the agreement you signed, you cannot go work for competing businesses if you leave your job. So you’re stuck, right?
Not necessarily. Fortunately for you, courts have recently limited the power of non-compete agreements to protect employees’ rights, making it possible (though not guaranteed) for you to get out of your non-compete. For a non-compete agreement to be enforceable, it must first be reasonable. In the eyes of the law, this means that it:
- Must protect a “legitimate business interest” of the employer;
- Must not place “undue hardship” on the employee; and
- Does not violate public policy.
Does The Non-Compete A “Legitimate Business Interest” Of The Employer?
If not, it may be unenforceable.
A non-compete must be the best and most narrow way of protecting the employer’s interest. In general, there are two categories of potentially protectable legitimate business interests that support upholding a non-compete:
- Where former employees acquired trade secrets or confidential information through employment and subsequently attempted to use it for their own benefit; or
- Where the employer has near-permanent customer relationships and where, but for their employment, former employees would not have had contact with the customers in question – for example, doctors’ and physicians’ offices. These relationships must be somewhat personal and extended; simply knowing the clients is not enough.
If your employer (or your position with the employer) does not fit within the above categories, then the non-compete may not protect a legitimate business interest and therefore may not be enforceable.
Does The Non-Compete Place An Undue Hardship On You, The Employee?
If it does, it may be unenforceable.
The non-compete must be limited in scope. This often refers to the geographical range of the restriction. A reasonable restriction might prohibit an employee from competing within a few miles, depending on the area and population density. An unreasonable (and thus unenforceable) clause might prevent the employee from competing in the entire state. For example, a non-compete signed in Chicago that restricts competition within 5 miles may not be reasonable, while the same scope might be deemed acceptable be in a more rural area.
If you experience an undue hardship as a result of signing a non-compete, the non-compete may not be enforceable.
Does The Non-Compete Violate Public Policy?
Usually the answer is “no,” but it’s a vague and subjective determination. Courts have wide latitude when interpreting this condition. Basically, if any restriction runs against the general public’s interest, a court can deem it unenforceable.
Were You Given “Sufficient Consideration?”
If not, it may be unenforceable.
“Sufficient consideration” is a legal term meaning that you, as the employee, must benefit as a result of signing the agreement. This might include obtaining the job (if you signed the non-compete as part of the employment agreement) or keeping the job for at least two years (if you did not sign it until after you were already employed).
If You Feel Comfortable, Ask For A Release
Talk it out! Depending on your relationship with your employer, you might benefit from a sit-down discussion of your non-compete. Go through the reasons why you believe the non-compete is unenforceable (we can help you organize your argument) and – this is very important! – stress your desire to leave the company on good terms. Your employer will appreciate your openness and willingness to come to a mutual understanding, and they may release you from the agreement. This release should be in writing and signed by both you and your employer. This way, you will be able to take another job without worry that your employer will take you to court.
What Happens If I Violate The Non-Compete?
A non-compete’s enforceability only comes into play if your employer takes you to court for breach of contract. Courts tend to disfavor non-competes and view them as a restraint on the workforce, but this is not to say that your non-compete will automatically be held unenforceable. It is still a very good idea to have an attorney analyze your contract to gauge your standing.
For more information, read our article Non-Competes: Possible Damages.
Many people who get out of non-compete agreements go on to freelance or form their own businesses. If you feel trapped by a looming non-compete agreement, G & G Law can help! Contact us today to explore the options for your future.