Is a Noncompete Enforceable if You're Fired?

Your employer may have you sign a non-compete agreement when you start a new job. The agreement limits your options when you leave the company. But can your former employer enforce it if you’re fired? The answer is that it depends. The agreement’s terms and the state you’re in determine its enforceability.

This article discusses non-compete agreements. States vary widely in their approach to these agreements. And the laws change rapidly. So, you should contact an employment lawyer in your area. An experienced attorney can help you understand your non-compete agreement. They can also give you legal advice on how to proceed with your job search.

What Is a Non-Compete Agreement?

A non-competition agreement is a contract between you and your employer. It limits your ability to work for a competitor. It also restricts your ability to start a competing business. They are common for jobs with access to confidential information, trade secrets, and customer lists. The intent is to keep former employees from sharing proprietary information with competitors.

A non-compete can be a stand-alone agreement. It may also be in your employment contract. Read your employment agreement to see if it has a non-compete clause. Employees, independent contractors, and consultants may have a non-compete. You typically sign the agreement when you’re hired, but you may have to sign it during your tenure or when you quit.

Your non-compete addresses the three following areas:

• The type of work or industry covered
• The length of time you can’t work in the industry
• The geographic area where the restriction applies

The advantages of non-compete agreements include the following:

• Protects the employer’s confidential information and trade secrets
• Incentivizes employers to invest in employee training
• Increases job security for employees

The disadvantages include the following:

• Weakens employee bargaining power
• Limits the ability of employees to work in their chosen field
• Restricts job opportunities for employees who don’t have confidential information

Are Non-Compete Agreements Enforceable?

The enforceability of the non-compete agreement is often an open question. Non-competes are generally binding. So they are enforceable when an employee leaves the company. It doesn’t matter if you’re fired or resign.

Valid agreements must be reasonable in scope. The scope includes the duration, geographic scope, and type of work. Your employer may also have to show the agreement is for a legitimate business interest.

The agreement may be unenforceable if it’s unreasonable. For example, the covered area is too broad. The reason your boss fired you may also invalidate the agreement. Suppose you were laid off because your employer is exiting your industry. In that case, your having trade secrets may not impact the business.

You may be able to challenge a non-compete as part of wrongful termination lawsuit. You also may be able to challenge it if your employer breached your employment contract when it fired you. For example, your boss fired you because you wouldn’t do something illegal for them. But be aware that filing a lawsuit doesn’t invalidate the agreement. You must win in court before you can ignore it.

State laws can vary significantly. Some states, like Oklahoma, won’t enforce a non-compete. California goes a step further. You can sue an employer that makes you sign one in that state. You should talk to an employment attorney to understand your rights.

Contact an Employment Lawyer for Help With Your Case

Non-compete agreements are generally binding as long as their scope is reasonable. But employment laws vary by state, and non-compete laws are no exception. So, the agreement your new employer had you sign may not be enforceable if they fire you. An employment lawyer can give you legal advice about your situation. They can explain the laws in your state and help you understand your legal rights.