How to Handle a Non-Compete, part 2

Part 2: You’re thinking about leaving your job…

image.png

When I talk to people who are considering leaving their job I always ask them whether they have a non-compete. Not accounting for a non-compete is one of the worst mistakes an employee can make in a job change. 

Imagine this scenario that I see frequently: employee gets a great job offer from a competitor of her current job. The job is to do essentially the same thing, but perhaps with a better product, better service, or better support for her position. She takes the job – either forgetting or not considering that she has a non-compete with her original employer. She puts in her notice, leaves the first job and goes on to this great new opportunity. She tells a few co-workers she thinks of as confidants.

Now assume for the moment that the non-compete is enforceable (the former employer will always assume that it’s enforceable, even if it’s garbage!): one of the confidants accidentally spills the beans, old boss finds out and remembers a non-compete. Old boss escalates to her boss who contacts legal. Legal sends a snarky letter to the former employee AND her new company, threatening a big hairy lawsuit to enforce the agreement against both the former employee AND her new company.

Usually the new company will just terminate her. 

Instead of having her old job and an offer for a great new job, she has NO job.

Plus her LinkedIn, Facebook, and Twitter are being watched like a hawk by a paralegal at old employer’s law firm for the next time they have to send out that same snarky letter threatening a big hairy lawsuit against the employee and her new-new employer. It is hard to find and keep a new job under these conditions.

The first thing this employee should have done is kept her paperwork, or asked to see all of her hiring paperwork (that’s usually when a non-compete is signed). It’s important to keep it and remember it — it can be a little bit awkward to ask your boss or HR department whether you have a non-compete…. “Why do you want to know? Are you considering taking a new job?”

So keep your non-compete, remember it well! And then, give it some consideration BEFORE you take the new job. 

The next step is to talk to a lawyer about whether the non-compete is enforceable and what the risks are in taking a new job. Spending a few hundred dollars to talk to a lawyer about this is MUCH better than spending thousands of dollars defending yourself in a lawsuit, especially if you’re unemployed because of that snarky letter threatening a big hairy lawsuit. 

The things your lawyer might consider with you probably include: 

  • Whether the employer has a legitimate protectable interest;

  • Whether the non-compete is reasonable in the scope of activity prohibited;

  • Whether the non-compete is reasonable in geographic scope;

  • Whether the non-compete is reasonable in how long it lasts;

  • Whether your new job would even be considered “competition;”

  • Whether there’s anything else that would make your competition “unfair.”

That’s not all that might be considered, but definitely all of those things should be addressed.

Jason Ramsland of Ramsland Law is experienced in writing, evaluating, litigating and defending against non-competes and stands ready to help at any phase of the process. Remember that an ounce of prevention is worth a pound of cure – but sometimes it’s too late and working toward a cure is the only option!

The next installment will cover what to do after you get that snarky letter threatening a big hairy lawsuit.