Overuse of non-compete agreements can backfire on businesses, P.2

Last time, we began looking at the use of non-compete agreements for low-wage earning employees. As we noted, there can be legitimate reasons for negotiating non-compete agreements with such employees, but it is important to keep in mind that every non-compete agreement must aim at protecting valid business interests.

Two companies that have recently been in the news for their use of non-compete agreements for low-wage earning employees are Jimmy Johns Gourmet Sandwiches and Amazon. While Amazon cut out its use of such agreements when the practice became public in 2015, Jimmy John’s only recently agreed to discontinue its use of such agreements as part of an agreement with New York Eric Schneiderman, who called the use of non-compete agreements for low-wage employees “unconscionable.” 

For employers, drafting and negotiating non-compete agreements should always be done in a way that recognizes the limitations of these agreements and the likelihood that they will be enforced in court. An agreement might sound good on paper, like it will protect a business interests, but it isn’t any good if it is thrown out because it is overbroad, lacks the support of sufficient consideration, or is being imposed on an employee who is unlikely to misappropriate valuable business information. Even if the agreement is only modified to ensure it meets legal requirements, that is a court battle a business can work to avoid by taking a careful approach to the matter.

Experienced legal counsel should always be consulted when it comes to employment contracts in general, to ensure a business does everything properly and that unnecessary liabilities are avoided. Realistically, of course, it is difficult to avoid all litigation over non-compete agreements since employees who are notified of their breach of an agreement often fail to cooperate. Business can work to protect their interests by working with an attorney who is experienced in this area of business law.

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