Frontier Home Business Week Home Contact Us Business Week Archives


Navigation
 
 
PERSONAL BUSINESS

4.12.99  
The Ties that Bind You to Your Old Company
How tight are they? Here are some ways to tell

Location matters. Some states are hostile to noncompete agreements; others less so. But all have certain requirements that employers must meet for their noncompetes to be valid. The conditions differ from state to state. Consult a lawyer who's familiar with state law in this area. If the requirements aren't met, a letter to your former employer may be enough to get you off the hook.

Reasonable interest. If your ex-employer has a "reasonable interest" that needs protecting, you must honor it. Price lists posted on a company's Web site may be fair game, for example. But you're courting trouble if you take proprietary software code or key blueprints that were locked in a safe.

What was in it for you? Were you compensated for the sacrifices the noncompete agreement called for? Judges look for such "consideration" as a sign the deal wasn't forced on you. That can be the original job offer, a raise, a bonus, or a promotion. If you didn't get any consideration, the agreement may not be valid.

You have to be able to work somewhere. A noncompete agreement may restrict your activities within reasonable geographical limits, a definition that changes depending on the industry and location. In general, courts want to make sure consumers can go to the business, doctor, or accountant of their choice. And they don't want to make it too difficult for you to earn a living, either. An employment lawyer can help determine your industry's average geographical limits.

It can't be a life sentence. Noncompete agreements may cover one to three years, depending on the industry. For high-tech companies, for instance, anything beyond 18 months might be seen as unreasonable -- because what you know may be obsolete by then. An employment lawyer can also determine your industry's average time limits.

Consistency counts. Find out whether your former employer fights to uphold its noncompetes in court. Some companies enforce all of them. Some don't enforce any. Some enforce some but not others. If your company hasn't fought noncompete agreements in the past -- or it does so selectively -- you may be able to work for a rival or start a business without much risk that a judge will find for the company in court. That's because your company's "reasonable interest" doesn't seem so important unless it enforces all noncompetes. Of course, this doesn't mean you can take confidential information or trade secrets with impunity.

By Laura Castañeda in Philadelphia

Return to main story
Top To: PERSONAL BUSINESS

RELATED ITEMS

Return to main story

To: PERSONAL BUSINESS



Business Week Home Bloomberg L.P.
Copyright 1999, Bloomberg L.P.
Terms of Use   Privacy Policy

Bloomberg L.P.