By Darren M. Sharp |
I see more and more employers utilizing non-compete agreements with their employees. Before signing a non-compete, here are three questions you should ask yourself:
Can I negotiate the terms of my non-compete?
From the employee’s perspective, non-compete negotiations can be awkward, since expressing concerning about future employment opportunities can conflict with the employee’s attempts to express his or her excitement about the present job. Regardless, given the potentially severe repercussions non-competes have, employees concerned about non-compete language should address the issue with the employer before signing.
Like any other term in an employment agreement, the specific language of your non-compete is negotiable, but just how negotiable depends on your specific situation. The more the employer wants you, the more power you have to negotiate. Also, much will depend on the employer’s true motivations for securing a non-compete in the first place. While Minnesota law states that non-competes are only enforceable if “necessary for the protection of the business or good will of the employer,” employers use them for a variety of purposes beyond this mandate. Bennett v. Storz Broad. Co., 134 N.W.2d 892, 899 (Minn. 1965). For example, the employer may be trying to clear space within the industry to expand its business or to decrease the applicant pool for its competitors. In such situations, negotiations may be futile.
On the other hand, if the employer is truly looking to protect its investment in its workforce or its good will, the employer may be willing to narrow the scope of the non-compete to the specific, legitimate concerns it has, before the parties sign. For example, if the employer is only concerned about competition within a specific metropolitan area (versus on a state- or nationwide scope) or only about protecting itself from its chief competitor, when pointed out, the employer may readily agree to narrow the agreement as long as it covers the employer’s actual concern.
Is my non-compete enforceable?
While courts say that non-competes are “disfavored” in Minnesota, they will not hesitate to enforce them if their terms are within the law:
The test applied is whether or not the restraint is necessary for the protection of the business or good will of the employer, and if so, whether the stipulation has imposed upon the employee any greater restraint than is reasonably necessary to protect the employer’s business, regard being had to the nature and character of the employment, the time for which the restriction is imposed, and the territorial extent of the locality to which the prohibition extends.
Id. Thus, in practice, determining the enforceability of a non-compete restriction requires analysis of the specific language of the restriction in the context of the employer’s business, as well as the employee’s specific job duties for the employer and the prospective employer.
After signing my non-compete, what if I find a better job or simply want to work elsewhere?
If you have a non-compete and you find a better employment opportunity, you must act strategically but also with commonsense. If a court determines that your new job violates your non-compete, you can be prevented from working at the new job, potentially leaving you without income and scrambling. Even if you have not violated the non-compete or the non-compete is unenforceable, the issue can be expensive to litigate and can chill discussions with prospective employers.
Thus, employees are often well-served by obtaining sound legal advice both at the front-end of employment discussions and before disclosing to your employer your intention to work elsewhere. Navigating these issues with an attorney experienced in non-compete law can help avoid unnecessary legal expense and remove barriers preventing you from working where you want to work. Please contact our firm for more information.
Darren M. Sharp is a senior attorney at Schaefer Halleen, LLC, where he represents clients primarily in employment law, condominium law, and other litigation.
In the employment law field, Darren concentrates his practice on discrimination, sexual harassment, and retaliation claims with a portfolio of clients ranging from manual laborers to senior corporate executives. He also regularly enforces medical leave rights and protects from retaliation employees who refuse to engage in illegal conduct or who report such conduct. Another principal focus of his practice is analyzing and providing advice regarding employment contracts, non-compete agreements, and severance agreements.