A noncompete clause is an agreement between an employer and an employee that limits where an employee can work if he or she leaves the company. Such a clause could bar an employee from working in a certain field, for a certain company or for any company in a given region. In addition, it may also specify how long the employee must wait before accepting a new job.
While such clauses have become more popular with employers, employees may be able to have a noncompete clause invalidated in court. If a judge decides that the clause is too broad, it could be struck down or modified. In many cases, simply taking a former employer to court could be enough to get the employer to negotiate more favorable terms for someone who is looking to move on in his or her career.
Some people say that these clauses unfairly hurt both employers and employees who are looking for the best fit for their needs. When a company cannot hire the best talent, it cannot gain a competitive advantage in the market. When a worker cannot work for a top company, it could hurt their career progression as well as limit their earning capacity. States such as California have taken steps to ban certain types of clauses in an attempt to level the playing field.
Although employers are allowed to protect trade secrets or intellectual property, they should not be able to unreasonably prevent an individual from finding future employment. In the event that an employee is fired or quits, the terms of the noncompete clause may no longer apply. Those who are having trouble finding a job due to overly restrictive language in employment contracts may wish to contact an employment law attorney to seek relief.
Source: CNBC, “Are noncompete clauses getting out of control?“, Bob Sullivan, June 25, 2014