Can an employer ban you fromworking a competitor?

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Can an employer ban you fromworking a competitor?

If you sign a paper stating that you cannot work at another cell phone carrier for a year after your employment with the current cellphone company that you work for, and then you get a job at a competitor, what kind of legal action can be taken against you? Is it possible they wouldn’t find out if you don’t use them as a reference?

Asked on March 30, 2011 under Employment Labor Law, Connecticut

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

What you are referring to here is what is known as a "non-compete" agreement.  And they are legal.  Non-compete agreements ensure that upon termination of employment, a former employee will not engage in activities that place them in direct competition with their former employer.  While the exact terms of these agreements may vary, they are subject to state laws regarding employment.  Typically, a non-compate is an effective means to ensure that former employees do not make use of proprietary information to lure customers away from their former employer.  However, they do specify a specific timeframe that the former employee is expected to refrain from engaging in competitive employment. Generally, the timeframe ranges from 1 or 2 years to up to 5 years, depending on the circumstances and specific jurisdiction.

As to whether or not your former employer will find out of your new employment with one of its competitors, it's hard to speculate.  However, if it does find out the penalties for your breach of the agreement should be spelled out in the non-compete itself. 

At this point, you should at the very least speak with an employment law attorney and see what your options are.  Sometimes, if a non-compete is overly broad or in some other way legally defective, it will be unenforceable.  Again, consulting directly with a lawyer in your area is your best bet.


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