As an attorney, I get two types of questions related to noncompete agreements:
- Is this contract not to compete enforceable?
- Would you draft a noncompete agreement for me?
1. Enforceability of NonCompete Agreements
Whether the contract is called a “noncompete” or “do not compete” agreement, the intent is the same: the employer seeks to bind the employee from leaving employment and competing with the employer. Whether they are enforceable depends on a number of factors to be analyzed by an attorney. These factors are explained generally in these articles:
Before you ignore a noncompete agreement, you should consult with an attorney to analyze the contract. An attorney can give you a legal opinion regarding whether the noncompete is enforceable. The consequences of breeching a noncompete agreement may include a temporary restraining order preventing you from working in violation of the noncompete along with a lawsuit for monetary damages.
2. Drafting NonCompete Agreements
The laws involving noncompete agreements varies across the United States. A noncompete agreement that is enforceable in one state may not be enforceable in another. For this reason, understanding Minnesota law is important. Also, noncompete contract forms purchased on the internet may be inadequate for parties in Minnesota.
When I draft a noncompete agreement, the process involves carefully applying relevant Minnesota law to ensure the contract remains enforceable. Properly written noncompete agreements are routinely enforced by courts in Minnesota. However, mistakes can void the agreement. For this reason, you should consult with an attorney if you need a noncompete agreement drafted.
2009 Update
Three 2008 Minnesota court cases may make noncompete agreements easier to impose on employees and enforce on ex-employees who signed noncompetes. Three Minnesota Court of Appeals cases upheld noncompete provisions under a variety of circumstances:
- Tenant Construction, Inc. v. Mason, 2008 WL 314515 (Minn. Ct. App., Feb 5, 2008) (unpublished).
- Sealock v. Petersen, 2008 WL 314146 (Minn. Ct. App., Feb 5, 2008) (unpublished).
- Witzke v. Mesabi Rehabilitation Services, Inc., 2008 WL 314535 (Minn. Ct. App., Feb 5, 2008) (unpublished).
Witzke is especially interesting because the court held that “continued employment” for a long duration after signing the noncompete will qualify as “consideration.” Previously, the general rule was that a noncompete must be accompanied by “independent consideration” (normally some sort of financial compensation) to be enforceable on a current employee.
If you are not an attorney, you should consult with an attorney to determine whether your noncompete is enforceable.
About the Author: Attorney Aaron Hall is experienced in noncompete agreements and is available to analyze noncompetes or represent parties with noncompetes. He is licensed to practice law in Minnesota. His work is largely in the Twin Cities, Minneapolis and St. Paul, MN. He provides legal counsel to businesses, business owners, and individuals.
{ 21 comments… read them below or add one }
If I know someone who signed an agreement and was laid off and the agreement was signed for 3 years and for the whole state what do you think the chances are that this will be upheld in a court of law?
Jennifer:
There are a number of factors that need to be considered. For example, if the business served a five mile radius of its location (such as small health club), a noncompete covering the entire state of Minnesota would exceed what is necessary to protect the interests of the business. However, the facts you mentioned would not, on their face, make the noncompete unenforceable.
Aaron
We contract with healthcare entities and provide the therapy services to their patients. The therapist are our employees and have non-compete with us -theri employer. We also have a non-compete clause in our contract with the healthcare entity in essence eliminating them from employing our therapsits should the contract be terminated. The client is considering cancelling our contract and feel that MN law would allow them to break the non-compete and hire our employees? Will MN law uphold the client to client non-compete?
Debbie, it would be helpful to fully understand all of the circumstances surrounding these agreements. In general, none of the facts you presented would permit someone to escape a noncompete agreement. Feel free to give me a call.
I worked for a Freight Company for 4 years, and quit to help/work at a family business. After 6 months; the family business closed down, so I had to seek employment and I got hired to work for another Freight Company. I worked here for about a year, and now I just found out that I might be getting sued for violating my non-compete agreement. My old employer’s lawyers have sent papers, they’re asking me to quit my job & pay 50K as per the non-compete agreement & legal fees.
Can they really enforce this on me? I don’t believe I’m doing anything wrong, at my old job I was doing customer service/dispatch support work, I’m currently a receptionist & doing clerical work at my new job. I’m just trying to make an honest living & pay my bills. I’m 7months pregnant and I can’t afford to quit my job. Can my old employer really sue me, take me to court?
I was laid off in October by my former company. When I signed the non-compete (in 2005), they were located in Minnesota, now they are in Wisconsin. I reside in Missouri (both then and now). From the beginning of my employment, I was given a sales territory of the Western US and Canada. At no time did I ever work for them in Missouri, Minnesota or Wisconsin. Is the non-compete apply to the laws of which state? What if I move to lets say California or Texas. Can they enforce this on me wherever I live and/or work?
I started at a company when I was just turning 16 years old, I am now currently 20 and wish to leave this place to go to another business and do the same thing. I have no intention of taking customers or trade secrets over, just that I need more pay and they are willing to pay a lot more for my abilities. With my age being 16 when I signed the non-compete contract, will it still hold up?
Is there any documentation on subcontractors versus employees and non compete agreements? where can i find such information?
Does a former employer have an obligation to serve a cease and disist order as pertains to a no compete agreement within a reasonable amount of time? If so, how long does the former employer have to file for it or for a TRO.
There are 12 of us in sells department. We each received the same updated contract to sign. Our compensation in the contract is less. Everyones is 17 pages of jargon EXCEPT mine. They through in a last page with a non-compete clause. No one else has this clause…only mine!!! My questions are 2 fold …1) Is it enforceable if I am the only one that has the additional page and 2) Why?
Thanks
John
Dean:
Yes. Employers must take legal action to enforce a noncompete agreement within a certain amount of time to preserve their rights. The amount of time allowed would be based on a statute of limitations or other legal deadlines. To learn the deadlines in your situation, you should obtain advice from an attorney who understands the facts and circumstances in your case.
Aaron
Cathy:
I am not sure where you could find information regarding the differences between a noncompete agreement with an employee vs. a noncompete agreement with a subcontractor (or independent contractor). You could hire an attorney to research this for you or possible a reference librarian at a law library could help you find this information.
Aaron
Jordan:
The fact that you were 16 years old when you signed the noncompete agreement will probably not get you out of the agreement. However, the noncompete agreement might be unenforceable for other reasons (as noted in the article above).
Aaron
I was recently laid off from a company in which I had signed a non-compete with. I’m wondering if a non compete can be considered an implied contract that the company would have work for me, and since laying me off for no fault of my own that would mean the company is breaking their end of the contract? Thus meaning I’m still bound by the non-compete but they are liable for any lost income as a result of my not working for them.
If more detailed information is needed to answer this question, you are welcome to e-mail me.
Thank you
Jon:
In general, a company has no obligation to keep an employee employed after the employee signs a non-compete agreement unless the terms of the agreement state otherwise. It may be worth paying an attorney to analyze the agreement and determine whether the non-compete agreement converted you from an “at will” employee to a contract employee, but most attorneys who draft non-compete agreements are very careful to prevent that from happening.
Aaron
I am a contracted medical sales rep and live in Minnesota. I recently had signed an updated non compete contract, but didnt get a signed copy back from the owner. I had asked my manager after a couple of months where my signed contract was, and he said the owner hadnt got around to it. In the meantime the company went with direct reps instead of contracted sales reps. Since I never received a signed copy of the contract, am i under contract?? More importantly, is my old contract null and void?
Thanks
Jeff
Jeff:
You are bound by any contract you enter, even if you did not get a copy. A contract is not null or void simply because you did not receive a copy.
Aaron
Aaron,
If the copy was never signed by the manager or the owner, how am i legally under contract??
Thanks
Jeff
Jeff:
If the business never agreed to the terms, you are not bound to the “contract” because it was essentially just an offer from you that the business never accepted (so no contract was formed). One question will be whether the business signed the contract after receiving it from you, even though they never gave you a copy. My point is that it doesn’t matter if you have a copy if both parties agreed to the contract.
Keep in mind that a contract is an agreement between parties, which can be oral (not written). Technically, it doesn’t matter if a contract is written and signed on a piece of paper. Of course, it can be difficult to prove there was an oral agreement if there is no written evidence, such as a signed document labeled “contract,” a letter confirming the agreement, or an email.
Disclaimer: This website is for the general discussion of legal concepts. For an analysis of your situation, you should meet with an attorney and discuss all the facts and circumstances. There are a number of facts and circumstances that could produce a different result (and legal advice) from the general principles discussed here. Readers should not rely on the information discussed here—consult an attorney for your specific situation.
Aaron
If a veterinarian is providing specific services as an EMERGENCY veterinarian for a business that strictly provides emergency veterinary care, can the employer prevent the veterinarian, via a non-compete contract, from practicing regular daytime veterinary services within the defined geographic region? Doesnt’ seem fair if there is no risk of impacting the emergency veterinary business. Thank you.
Eric:
You are correct, that doesn’t seem fair because there is an argument that you would not be competing, and the employer has no interest being protected with this noncompete. This is a grey area and will partially depend on the language of the noncompete agreement and circumstances involved with your job. I suggest having an attorney analyze your situation. You may contact my firm if you would like.
Aaron