Karen Johnston

Q. I was just offered a job and am being asked to sign an employment agreement.  The agreement states that should I leave the company, I will not “steal” any of the company’s clients who were clients for two years prior to my leaving. What recourse do I have if I get terminated and need to find employment in the same line of work and in the same geographic area?

A. Most states will enforce a valid employment agreement which contains non-compete restrictions, regardless of the manner in which the employment relationship ends. Therefore, you need to thoroughly review this agreement before signing it and make sure you understand what will happen at the end of your employment. You may also want to consult an attorney who can answer any questions you may have about the agreement and explain to you how the law in your state views non-compete restrictions. Generally, state law governs the enforceability of this type of agreement, and not all states favor enforcement, or at least strict enforcement, of the terms of the agreement. 

As to recourse if you are terminated, there may be some options, but it is likely at that point the employer will have the stronger case.  Depending on the circumstances of your termination, one option is to talk to your employer about your need to find alternate employment in the same geographic area.  It sounds like the company is most concerned about specific customers rather than all customers in the relevant geographic area, so that should leave you some flexibility.  Also, your employer may be willing to work with you by providing input during your job search as to whether a specific job opportunity would be in violation of the agreement.  This kind of discussion could also include the scope of the relevant geographic area.  While unlikely, the employer may even be willing to negotiate the length of the restriction, depending on the nature of the business, the interest is seeks to protect through the non-compete agreement and the good will between you and the employer at that time.

Enforcement usually begins when the employer learns of the violation of the agreement, or the threat of a violation. The first step is for the employer to go to court and seek a temporary restraining order to stop the violation and preserve the status quo.  Generally, the employer must show it is more likely than not to win the litigation to obtain the temporary order. The next step would be for the employer to seek a permanent order preventing you from violating the agreement. Within the context of this litigation, the court does have the authority to review all of the facts and circumstances and to change any terms of the agreement it finds unreasonable or unnecessary and then to enforce the agreement as modified.  In other words, the court can say the agreement is valid, but the term of the restriction will be one year instead of two. 

As you can guess, conduct which triggers an enforcement action will lead to an expensive and stressful litigation. Therefore, if you have any leverage at the time you are asked to sign the agreement, which is the best time to attempt to negotiate changes that will create an agreement with which you could more easily comply in the event of a job loss. You should always take these agreements seriously, as you may well be limiting your employment options in the future. If you are unwilling to accept these limits, you may want to consider whether this is the right job for you.