Noncompete...am I screwed?

June 18, 2009 9:23 AM

Noncompete Filter: I'm in Chicago and signed a non-compete with my employer when I started, and was recently terminated by them (downsizing and whatnot). Is it still enforceable?

They have offered me a severance agreement that also has a non-compete in it which I am debating whether or not to sign.

Is the original non-compete enforceable? I am consulting with a lawyer but also wanted to get the hive mind's thoughts and resources on the matter.

Obviously in this economy I'd be screwed if I couldn't work in this industry with my current skillset (I perform a sales related function).

posted by Elminster24 to law & government (13 comments total)

Non-compete agreements are usually designed to extend past termination of employment. Whether the agreement is enforceable is something only a lawyer with full access to the text can determine.
posted by Inspector.Gadget at 9:28 AM on June 18

Generally they're unenforceable if they terminate you.

Adding one to a severance package may or may no be enforceable - ask a lawyer - but strikes me as incredibly douchebaggy. "We don't want you, but we don't think you should be able to go elsewhere." What?
posted by Tomorrowful at 9:32 AM on June 18 [1 favorite]

Obviously in this economy I'd be screwed if I couldn't work in this industry with my current skillset (I perform a sales related function).

Regardless of the legality, from that description it sounds like it is most certainly not in your best interests to sign it. It also, being as they are laying you off, seems pretty damned unreasonable of the employer to expect you to, to me. Although the non-compete would be for direct competitors of the company, rather than just sales - is your industry very specialised?

If it were me, I'd be factoring how much it would cost me to comply with the non-compete and present that to them - if they won't cover how much it would cost you to comply, then they need to remove the clause, to my mind. Anything else would be unreasonable if they would genuinely be crippling your income potential.
posted by Brockles at 9:32 AM on June 18 [1 favorite]

We have no idea what the con-compete agreement says.
posted by Pants! at 9:33 AM on June 18 [1 favorite]

Yeah, whatever the lawyer says, do that.

Anectdotally (and possibly talking completely out of my ass), your new employer may be able to provide air cover if they know about the agreement, either by re-jiggering your title/responsibilities to get around it or by helping you out if push comes to shove.
posted by jquinby at 9:35 AM on June 18

Sounds to me like you need to talk to an employment law attorney, stat. Especially since no one here has any idea of the terms in your non-compete. Sometimes they're unenforcable on their face. Sometimes they're impossible to get around. It all depends on how they're phrased and the current state of local law.

All of which you're going to need to discuss with a lawyer.
posted by valkyryn at 9:44 AM on June 18 [2 favorites]

I'd only sign a non compete on termination if it had compensation attached. If they want you out of the game for a year they need to pay you for 18 months.
posted by IanMorr at 9:54 AM on June 18 [3 favorites]

Usually they just don't want you walking out with the Rolodex and bringing it to a competitor.

Perhaps a solemn promise not to do this would suffice?
posted by meta_eli at 10:15 AM on June 18

I didn't sign this when it was offered as a "sign this or don't get your severance" but as the 'severance' was really just my sick days and a token payment of maybe a day's work, I didn't sign it and got paid anyhow.

YMMV. Never sign anything you don't feel comfortable with.
posted by shownomercy at 10:15 AM on June 18

"Generally they're unenforceable if they terminate you."

Oh, this is such a dangerous thing to believe. I know people who've been sued because they accepted a job that violated the terms of their noncompete.

You need a lawyer who has expertise in such matters.
posted by 2oh1 at 11:01 AM on June 18

Since NDAs and non-competes keep coming up, I'd like to note that not all states enforce non-complete agreements as this guy notes.
posted by fiercekitten at 11:17 AM on June 18

It's my understanding that, in a lot of places, non-compete clauses aren't enforceable, because you have a fundamental right to earn a living and such clauses, if enforced, would impede that. In these circumstances, they're essentially a bluff, and companies rely on your credulity and unwillingness to find out.
Obviously, IANAL. Also, you need one to determine if your non-compete in your jurisdiction is anything resembling enforceable.
posted by willpie at 11:51 AM on June 18

IAAL but not yours.

1) Generally, yes, non-compete agreements are enforceable after you're let go. That's the whole point. Your employer doesn't want you taking the training and client list they've given you just so you can walk out the door and harm their business by opening up a competing shop down the street.

2) I know of no state that bans non-compete agreements entirely. California, I believe, comes the closest to having a total ban by limiting non-compete agreements to very narrow situations. No idea where Illinois falls on the spectrum of hostility to non-compete agreements.

3) Generally, non-compete agreements have to be reasonable to be enforceable. Courts look at things like how long you're forbidden from competing against your previous employer, the geographic area covered, and the manner in which you can't compete against your previous employer (e.g. how narrowly or broadly the industry is defined). Again, that's the general approach; no idea how Illinois does it.

4) Much depends on the wording of your non-compete agreement, which you haven't provided.

Short answer: no, it's not automatically unenforceable just because you were downsized; as for whether it was ever enforceable to begin with, check with a lawyer.
posted by saslett at 4:03 PM on June 18