As we start to slowly see positive signs emerging in the economy, employers are still receiving a large number of applications for their open positions. They are very selective when deciding who they want to hire, making offers on their terms. If the employees do not like the compensation or benefits being offered, they may have little room to negotiate.
Some of these employers in highly-specialized fields may insist that their new hires sign non-compete agreements. These agreements basically restrict the employees from finding work in a similar field in a particular region if the employment relationship comes to an end. Employers claim that these agreements protect their trade secrets and customer information, and therefore, the restrictions placed on employees are valid. However, courts in Minnesota have taken a different view on non-compete agreements that some employers are using within the state.
Like with any other contract, in order for a non-compete agreement to be valid, the employer must be giving the employee some consideration to enter in the deal. This means that the employee must receive something, such as compensation or continued employment, for signing the agreement. The courts will examine the consideration in these cases to determine if the parties each received some sort of benefit for the bargain.
Non-competes must also serve a legitimate employer interest. The restrictions in place over the employee must protect some aspect of the employer’s business. This could be customer lists or process information, or other issues that the employer feels gives them an advantage over their competitors.
The courts will examine the restrictions that the employer has made in the agreement, to determine if they are narrow enough to protect these interests. If the provisions are too expansive, that is they restrict too wide a geographic area or require the employee to be out of work for a long time, they may be struck down. There is often a balancing test that the court must consider between the rights and interests of the employee and employer.
If your employer is asking you to sign a non-compete agreement, speak to an experienced employment law attorney before making any agreements. An attorney can review the terms of the contract, and advise you on some of the potential long-term effects of the deal.
Some employers may be very aggressive with these agreements, hoping that you will not carefully consider the impact that this could have on your future career. Finding work in this economy is already challenging, and a non-compete agreement can make this much more difficult. If you have questions, be sure that you discuss these documents with someone who can explain all of the details to you, and help you make the best decisions for your specific situation.