Negotiating employment contracts can be a harrowing experience. The relationship between the complexity of the negotiation and the level of the position in the food chain of management is often directly proportional. The higher level the position that you seek coupled with the sensitivity of the work will often dictate whether your potential employer will be negotiating for the inclusion of a non-compete clause in your employment agreement.
Non-compete clauses by their very nature are significantly disfavored in a good number of states. That does not, however, prevent their inclusion within contracts, but does significantly affect their enforceability by the courts. In fact, in some professions, such as the practice of law, non-compete clauses are specifically considered to be unethical by the Model Rules of Professional Ethics because they limit the freedom of clients to choose their lawyer and because they may affect a lawyer’s professional autonomy.
That does not mean that non-compete agreements are prohibited, but rather that their scope is significantly limited. Precedent cases give us a framework on how non-compete clauses should be interpreted and enforced. Essentially, the courts have opined that non-compete agreements should not be excessively oppressive, but should be limited by scope, duration, and distance. The non-compete should be clearly defined as to what type of behavior or business it controls. It must be limited to a reasonable time and my not exist in perpetuity. Finally, the non-compete must be limited in the distance that a person is prohibited from conducting business. In most cases (but depending on the business and the nature of its goodwill), the courts hold that the distance term may not exceed a few miles.
Although these qualities of the non-compete agreements may seem to be fairly controlling, there are additional carveouts from liability where non-compete agreements may be involved. The scope, duration, and distance in a non-compete will often be heavily scrutinized, if not found to be unenforceable as a violation of public policy. The role that many courts have assumed is to protect the party on the adverse end of the non-compete agreement. In many cases, non-competes can be overbearing and, in the interest of public policy, courts do not want unassuming individuals to contract out of their ability to be employed or practice their professions.
Additionally, in order to protect the consumer, limited contact with previous customers is still allowed after a non-compete is executed. While the party may not solicit previous customer’s business directly, they may send letters informing of professional moves and the transition of business ownership. The courts have recognized that observing professional courtesies and the viability of the party’s future career and business relationships may transcend the constraining terms of a non compete.