Those Fossils in Your Employee Files are from Non-competosaurus
By Cory Reiss
New business clients often hand me a non-competete agreement and ask to enforce it against a former employee gone rogue. And all too often, that paper is like a dinosaur tooth: once fierce but now just a fossil.
Requiring employees to sign agreements not to work for a competitor has become so common that even your pizza delivery driver may have signed one. But in North Carolina, the ground has been shifting over the years to cover pre-existing agreements in dust.
A series of court decisions has rendered many non-competition agreements difficult or impossible to enforce. The law generally allows enforcement if the restraint covers a reasonable period of time and a reasonable territory. But courts have been narrowing those parameters, often based on fact-specific issues such as the nature of the business, where it actually operates, and the employee’s job description and contact with customers.
A non-compete that’s more than a couple of years old, or even a newer one that wasn’t drafted with these changes in mind, probably shouldn’t give employers confidence that they can hold employees to it. A non-compete should be tailor-made for your business, the types of employees subject to them, and the goals they are expected to achieve.
It’s probably a good idea to revisit this issue if enforceable non-competition agreements are of real concern to your business. Otherwise, you may find that your trusted legal beast has gone extinct.