One of the questions I get asked most often by associate veterinarians when reviewing a potential employment agreement or when they are contemplating leaving their current employer, is, “Is my non-compete enforceable?” The answer, unfortunately, is not always simple or straight forward. Nor is this, necessarily, the right question to ask.
A number of factors must be considered when determining whether non-compete provisions are enforceable. First and foremost are issues of state law. The laws of every state restrict what an employer can and cannot do to restrict a former employee from competing against them. Some, like California, go so far as to complete prohibit employers from including non-compete provisions in employment agreements. Those states that do allow non-compete provisions still, typically, require the restrictions within these provision to be reasonable given the circumstances of the particular situation. What is reasonable in those circumstances is a matter for a judge or jury to decide. This is where the problems with the initial question begin. In order for the judge or jury to make their decisions, a lawsuit has to be filed and evidence has to be presented. Once that determination has been made, the judge must then determine what, if anything, can and should be done with any unreasonable restrictions. Finally the judge must decide how to enforce what is left of the non-compete provision. All of this takes time and money; often unreasonable amounts of both, months, if not years, and tens of thousands of dollars.
The Better Question
Given the necessary investment of time and money required to determine whether a non-compete provision is enforceable, the better question to ask when reviewing an employment agreement may be, “What could happen if I violate my non-compete?” The answer to this question is often much easier to determine, as it can frequently be found in the employment agreement itself.
Most non-compete provisions allow for three types of relief, or some combination thereof; injunctive relief, liquidated damages, and the payment of attorney’s fees. Injunctive relief means that your employer can ask the court to prohibit you from working within whatever restrictions exist in your employment agreement. In many cases this relief is immediate, meaning that you can be prohibited from working until you prove to the court that the restrictions are unreasonable. A liquidated damages clause allows your employer to seek direct monetary damages for violations of the non-compete. These damages can range from a flat fee for any violation to a percentage of what you earn with a new employer. Liquidated damages are only award if a violation is proven, so you either have to go through litigation or admit a violation for them to be awarded. And finally, almost every non-compete allows for attorney’s fees if any litigation is required to enforce the non-compete provisions. Sometimes attorney’s fees are available only to the prevailing party (which can be a good thing if that’s you) but often they require the employee pay regardless of who prevails. By evaluating these provisions you and your attorney can determine what the worst case scenario might be if you violate your non-compete, and how you should proceed in your particular situation.
What should you take away from this…
- In many states, non-competes are enforceable, at least to some degree.
- It’s quite expensive and time consuming to find out whether a certain provision in a non-compete is enforceable.
- When evaluating whether or not to take action based on your non-compete it is often best to assume that every provision can and will be enforced to its greatest extent. and weigh the consequences.
- The subtleties of non-compete provisions are a complex legal issue. If you have questions, seek advice from an experienced attorney.
If you have more questions about a non-compete provision, please feel free to contact us.
The comments in this blog are not intended to establish an attorney-client relationship, are not confidential, and are not intended to constitute legal advice. Proper legal advice can only be given by an attorney who agrees to represent you, who reviews the facts of your specific case, who does not have a conflict of interest preventing the representation, and who is licensed as an attorney in the state where the law applies.