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Trying the most complex issues for over 30 years.

Not all non-compete agreements are enforceable

On Behalf of | Feb 2, 2021 | Emerging Business, Employment Litigation

Non-compete agreements serve the interests of a company in many vital ways. So it is common for employees, vendors, business partners, or consultants to sign them. Generally speaking, they also can protect trade secrets, prevent employees from exploiting connections gained through a job or even prevent executives from starting a new company or going to an established competitor. Whatever the circumstances, the parties must willingly sign a non-compete agreement for it to be enforceable.

Three key elements of a non-compete

When drafting a non-compete agreement, the contract will often include such details as:

  • Time: There could be a limit when a partner or employee starts a similar business in the same market. Enforceable limits are likely a few years.
  • Geography: Different businesses will have different sized markets they serve, which are likely tied to the specifics of the work. So a larger number of people in a similar position within the market translates into smaller geographic limits.
  • Types of jobs: The specifics could be managing a restaurant, selling pharmaceuticals or designing software for hospital computer systems.

They can’t be too restrictive

Judges will often regard overly restrictive contracts as an unfair restraint of trade or that the agreement hinders a person’s ability to further their career within the same field. Non-compete agreements that are reasonably specific in their language and scope will have a better chance of being enforceable.

Much room left for interpretation

Those with questions or concerns in drafting, enforcing or signing a non-compete agreement often find it helpful to discuss the details with an attorney with experience handling non-compete agreement disputes in Colorado. They can help protect a client’s best interests, particularly when arguing the case before a judge.