How to Circumvent a Non-Compete Agreement
A non-compete agreement, formally known as a Covenant Not to Compete (or CNC), is an agreement between an employer and an employee that prohibits the latter from pursuing certain business ventures after ending a relationship with the former. The primary function of a non-compete agreement is to prevent a former employee from forming outside relationships with the employer’s clients, taking a position with competitors of the original employer or developing a new company that directly competes with the former employer. Non-compete agreements aim to protect the employer’s trade secrets that the former employee could later use against the employer and prevent future competition. Such agreements are legal in most U.S. states, but under certain circumstances, an employee may be able to circumvent a non-compete clause.
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Instructions
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Challenge the legality of the agreement in your state. Four states outright prohibit non-compete agreements, including Montana, Nevada, North Dakota and Oklahoma. In these states, any non-compete agreement that your employer requires you to sign is automatically void, and your employer cannot bind you to such an agreement under any circumstances--even if you agreed to the terms of the contract. Further, some states restrict the use of non-compete agreements, including California, Massachusetts, Virginia and Washington. These states have stringent guidelines for valid non-compete agreements and narrow the circumstances under which such an agreement may form. California, for example, automatically voids any non-compete agreement that does not arise from the limited circumstances defined under the California Business & Professions Code (CAL. BPC. CODE § 16600). Never assume that a non-compete agreement is legal and valid simply because your former employer presents it as such.
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Challenge the legality of restriction length. It is increasingly common for companies to enforce CNC agreements for a longer period that permitted by state law. The average acceptable time period for CNC agreements is one to two years; any CNC agreement that exceeds this may be violating state laws and thus, void. Locate your state commercial code, typically found within the state civil code, to find out how long your employer can enforce your non-compete agreement. If the agreement’s terms exceed the restrictions permitted by law, you can move to have the entire agreement voided immediately.
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Choose a different specialty in the same line of work. Attorneys, physicians and other professionals often circumvent CNC agreements by finding a new line of work in the same general field. A family physician, for example, may successfully avoid the terms of such an agreement by starting a new practice in pediatrics. Likewise, a private music instructor who previously taught guitar lessons can circumvent a non-compete agreement by switching to piano or voice lessons.
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Move your business to avoid the scope of your non-compete agreement. This is a somewhat drastic move, but non-compete agreements are limited to how far they geographically reach. If your CNC agreement limits you to a scope of 50 square miles, for example, you can move you practice to outside of this geographical region to continue your business without violating your agreement. Further, most states do not enforce non-compete agreement across state lines, so moving to another state may effectively circumvent the agreement.
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Renegotiate the terms of your non-compete agreement with your former employer. Many employees have successfully circumvented some restrictions of their agreements by approaching their former employers and asking for leeway in certain areas. While this probably will not help you avoid the entire agreement, it could permit you to pursue certain endeavors while allowing you to uphold the rest of your obligations.
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References
- "Principles of Employment Law;" Peggy R. Smith, et al.; 2007.
- "Employment Law: Cases and Materials;" Mark A. Rothstein; 2007.
- "Contracts: Cases and Materials;" E. Allan Farnsworth, et al.; 2008.
- NOLO: Noncompete Agreements: How to Create an Agreement You Can Enforce
- The ‘Lectric Law Library: Hiring
