Can an Employer Make Me Sign a Non-Compete?

by Team eLocal
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Is your employer pushing you to sign a non-compete agreement? Signing any type of legally binding document should be a reason for you to do some research — so you’re in the right place.

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While non-compete agreements are common, you could argue that the details are too restrictive in some cases. Find out more about how these employment contracts work and what rights you have if your employer wants you to sign one.

What Is a Non-Compete Agreement?

A non-compete agreement is a legal contract between you and your employer. It says you won't work for a competitor for a certain period after you leave your company. It might also state that you won't start a business that would be considered a competitor. It might also prohibit you from recruiting other employees to work for a company you start.

The agreement should be very detailed in what you can and can't do. When prohibiting you from working for competitors, it should specify things like:

  • Geographical area: The work restrictions should be limited to a certain geographical area, such as a 50-mile radius of the company's headquarters. Larger geographical areas, such as the entire state, are often more difficult to enforce.
  • Time frame: You're not barred from working for a competitor forever. The contract should specify a time limit, such as six months. Overly long periods could be considered unenforceable if they're unreasonable.
  • Competition: The agreement should specify what a competitor is. This could mean listing specific company names or providing a detailed description of the types of businesses employees need to avoid.
  • Included restrictions: You should have details on what type of work you're barred from performing during the agreement period. This could include specific company information you're not allowed to use or share.

The agreement should also include what happens if you break it. Every state is different in how it enforces non-compete agreements, and some states, including North Dakota and Oklahoma, don't enforce them at all. However, you could be subject to the listed consequences if you don't stick to the agreement and your state enforces the agreements.

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When and Why Are They Used?

Non-compete agreements can be used in any industry, but they're more common in some industries, such as media, finance, manufacturing and information technology. They're designed to protect the employer's interests and keep their advantage within their industry. They often protect things like trade secrets, proprietary processes, confidential information and other specialized information an employee gains when they work for the company. It's also a way to protect their investment in training and resources that they provide you as an employee.

If you leave the company and immediately go to work for a competitor, you could share the information you have to give them the edge. If you start a business offering competing goods or services, you have an unfair advantage with the knowledge you gained through your job. Your new company could seriously hurt your former employer's business based on the information and skills you gained while working for it.

Can My Employer Make Me Sign a Non-Compete Agreement?

It's natural to be hesitant about signing a non-compete agreement. After all, when you leave a job, it's often to pursue new career opportunities, whether that's working for a different company or starting a business. If those future plans involve staying in the same industry, the non-compete could make it difficult to move on quickly.

While your employer can't force you to sign a non-compete agreement, choosing not to do so could affect your employment. It's common for employers to ask new hires to sign this type of agreement upon hiring. If you refuse, it could cause the company to rescind your job offer. If you already work for a company and they want you to sign an agreement now, you could lose your job if you don't.

However, you can fight it if you feel the agreement is unenforceable or unfair. For instance, you could fight the geographical area for competitors you can't work for or the time period of the contract. An employment lawyer can help you review the agreement and fight it if it's an unfair arrangement.

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