As a business owner, you might have an employee who does a lot of important work for you. However, if that employee left your company to work for a competitor or went into business for himself, you might face some stiff competition. This is why some business owners require their employees to sign non-compete clauses. But under some circumstances, a judge might actually rule a non-compete clause is unenforceable.
The American Bar Association explains that businesses generally only applied non-compete clauses to people who knew the trade secrets of a business, professionals who took on clients, sales people, and corporate executives. In recent years, many more businesses have used non-competes, like businesses that are smaller than large corporations, and have applied them to employees like low-wage workers. But the greater use of non-competes has also invited greater scrutiny as to their use.
If someone litigates a non-compete clause to get out of it, judges will consider whether the non-compete preserves the legitimate interests of the business and whether it contains reasonable provisions. For instance, a judge may uphold a non-compete that binds an employee who could draw away clients and customers from the business. However, the judge might strike down a contract that binds an employee that has no way to entice clients away from the employer.
Non-competes might also lose validity if they restrict employees who do not possess any knowledge of the trade secrets of the company. Understandably, business owners do not want employees who know their trade secrets to go work for a competitor and apply that knowledge there. But a judge might consider a non-compete overreaching if it tries to bind someone who does know any sensitive information about a company.
Other factors may sway a judge to strike down a non-compete, such as unfairly restricting the kind of work an employee may take upon leaving a company. Some states are also more hostile to non-competes than others, so how a Georgia judge will rule could differ from how judges rule in a state like California or Illinois. The possibility of a judge striking down a non-compete is why many business owners ask professional attorneys to help craft their non-competes so that they do not run into legal problems.