Non-compete agreement

Discussion in 'Chit Chat' started by NasdaqTrader, Aug 29, 2006.

  1. Perhaps someone may know the answer to this. My wife works as a financial recruiter for a company and wants to start working on her own from home. Anyway, she signed a non-compete agreement when she started a year ago. It says in the agreement that she can't work within a 100 mile radius from the company office for a competing business for 1 year after leaving her current company. I assume competing business also means working on your own as well. Can the company hold her to this agreement and make her actually wait for 1 year before she starts recruiting again? How would they even find out she was doing it? What can they do if you don't wait for 1 year; what's their recourse?
  2. I assume it was part of an employment contract. If so, they can sue if she's in violation of that contract. They're concerned with poaching. Recruiting is a competitive biz, they would likely sue if found that she was in violation of her non-comp.

    Have her open an LLC with a postal mail box address outside the 100 mile radius.
  3. What benefit does an LLC have versus sole proprietorship? What about a corporation? Is it expensive to open an LLC?
  4. Generally, a non-compete is designed to stop an employee from poaching customers away. This is fair and what a non compete really should be about - unless she is an executive and had inside info that an competitor would appreciate having in order to take an unfair advantage.

    So, assuming that she stays clear from old clients for one year, and she is not a former executive or insider having critical knowledge going to work for an insider, she is keeping to the spirit and intention of the agreement.

    Companies cannot force you to change professions because of the non-compete, nor can they legally deny you the right to try tomake a living either through them.

    As long as she is honest and keeps integrity regarding these issues, there will not be an issue.

    Of course she could have worked for my old company who has a habit of legally dunning former employees who go to work for competitors... Idiots out of Hopkington.

    If she left on good terms, likely they will be fine. If she left on great terms, is it possible she can partner with her old employer? Sometimes that is a great way to start a business working in a complementary way with them.
  5. neophyte321

    neophyte321 Guest

    This is rhetorical question right? "Can someone be held to contract??"

    The exact thing happened to a friend, he was a recruiter and accepted an offer from another firm. His previous firm took him to court, not sure how it turned out, but they made his life hell for a while at least.

    Tell her to contact an attorney, there may be a loophole.
  6. jem


    Whether and how state courts enforce non- compete contracts depends on the state.
  7. Can you go to prison or pay heavy fines for not honoring a non-compete agreement or is the worst that can happen is that the court forces you to stop your business until the 1 year has gone by?
  8. jem


    civil court means money damages. Not really a fine but say lost income and expenses. (punitive damages are sort of like fines)

    criminal court means the possiblility of confinement or fines.

    contracts are almost always civil court.

    non competes are contractual matters, the breach of which could mean monetary damages.

    were your wife given a restraining order, which she were to violate then perhaps you have to worry about jail.

    Of course I make these statements in general. to get me or any smart lawyer to write an opinion letter -- applicable to your wife's situation -- would require I review the work manuals, company policies, employment contracts and state and federal law.
  9. Conceivably the court could order that she pay damages to her former employer, likely based on income she had earned in violation of the agreement. And of course, it could injoin her to observe the non-compete.

    It is difficult to say how a court would rule, as it varies from state to state. Generally, they are enforceable to the extent they are reasonable in scope and duration. A one year, 100 mile radius restriction does not sound totally unreasonable to me, but it is a matter that will be largely in the court's discretion.

    No matter who wins, your wife will have to pay attorneys fees, which could be hefty. You should also review her contract to see if she is obligated to pay their fees and expenses incurred in enforcing the non-compete if they win.
  10. How would her former employer even find out she was doing it from home? Would setting up a PO Box outside the 100 mile radius work?
    #10     Aug 30, 2006