Is a provision within an employment agreement which states I will not directly or indirectly compete as an employee, within the US for a period of 1year after termination enforceable?

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Is a provision within an employment agreement which states I will not directly or indirectly compete as an employee, within the US for a period of 1year after termination enforceable?

I am concerned that this could be interpreted as preventing me from retaining employment in my chosen career.

Asked on November 16, 2012 under Employment Labor Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Noncompetition agreements are enforceable. A one-year non-competition agreement is at the outer edge of what would usually be enforced for a non-owner employee, but if you are at a senior level, it may well be enforceable. (And note: even if a court were to determine that for your level, one year is excessive, all the court would do is reduce the length of time to a reasonable one--e.g. 6 months--rather than invalidate the provision entirely.)

As for whether or not the non-competiton agreement could cover all the U.S.: it depends on your level, profession, and industry. The rule of thumb is, a non-competition agreement should be no broader than necessary to protect the company from the employee working for a competitor. So, say you are a car salesman at a dealership in your city: since the dealership would only compete with other dealers within a few miles, an enforceable non-competition agreement would probably only bar you from selling cars within a 10 or so mile radius. On the other hand, say you are a senior marketing person for Amazon.com--their market is the entire U.S., and they compete nationwide, so a noncompetition agreement could bar you from working for online retailers who sell anywhere in the U.S.

Therefore, to understand what would be the enforceable limits of this non-competition agreement, you need to bring to an employment law attorney, who can review it in light of your level, profession, and industry.


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