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Can I Get Out Of My Non-Compete Agreement?

I get this question about 5 times a month. Getting an employment offer presents a new, exciting opportunity. As part of the hiring process, the company may provide the newly hired employee a a packet of on-boarding documents that need to be signed. One of those documents may contain a slew of restrictive covenants, such as a confidentiality provision, a non-solicitation provision, or the most onerous of all, the non-compete provision. An enforceable non-compete agreement can have an adverse impact on future career opportunities. 

It is true that the Legislature enacted a massive overhaul of non-compete jurisprudence in the fall of 2018. The new law does make it more difficult for a company to enforce a non-compete agreement. Law firms that represent employees heralded the new law as a momentous victory for employee rights. However, employers have learned how to adapt to the new law.

For example, if a company provides a newly hired employee a non-compete agreement at the start of the employee-employer relationship, the company is obligated to provide a ‘garden leave’ provision, which means that the company has to pay the employee fifty percent (50%) of the employee’s earnings for the duration of the non-compete period, which is capped at one year. For example, a salaried employee earning $60,000.00 per year would be entitled to $30,000.00 for honoring the non-compete provision for 12 months.

However, that ‘garden leave’ provision does not apply to separation agreements (a/k/a severance packages). If the company provides the employee a separation package at the conclusion of the employee-employer relationship, not only will the company include a global release of claims, but the company may also add in a non-compete provision.

Additionally, companies can only enforce a non-compete provision if the employee is fired for cause. If an employee is laid off without cause, then the company cannot enforce the non-compete provision. A cynical person would conclude that a company is thus motivated to invent a for-cause reason to terminate an employee so the non-compete provision is enforceable.

The new law also has language that indicates that a company does not have to include ‘garden leave’ language that obligates the company to pay the employee during the non-compete period. The new law states that the employee and the employer can agree on other ‘consideration’ that is mutually agreeable. A cynical person would conclude that this language is a loophole that companies can exploit to negate the ‘garden leave’ requirement. The consideration to the employee can be something modest, such as a paid day off on the employee’s birthday. While most employees would probably be thrilled to have a paid day off on their birthday, it is not comparable to getting fifty percent (50%) of the employee’s earnings for the duration of the non-compete period.

Employees should not despair. There are many ways to get out from under a non-compete agreement, even before the . If you think you may be ‘stuck’ based upon a non-compete agreement, you should consult with an employment law expert. The attorneys at Davis & Davis, P.C. have experience and expertise with all employment agreements, including non-compete agreements.

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