What Happens If I Break a Non Compete Agreement

Cancelling a non-compete obligation may also be possible if your employer has promised you something in exchange for signing the agreement and does not intend to keep that promise. An example of this would be an employer explaining that he or she would only enforce the contract if you tried to work for a single competitor and later prevented you from working for another competitor. When the former employer was able to win, the amounts were $7,313.72 (Hagerty, Lockenvitz, Ginzkey & Associates v. Ginzkey); $49,322.50 against former employees who started their own business using the trade secrets and customer lists of the former employer (Cherne Indus., Inc.c Grounds & Associates); $138,000 under a lump-sum indemnification clause in a professional services firm (BDO Seidman v. Hirshberg); and $15,000 to $25,000 under a lump-sum compensation clause in a clinic (Raymundo v. Hammond Clinic Ass`n). The amounts can be much higher or lower, depending on the loss that the former employer can prove. However, former employers also claim damages (mainly, but not always, against the former employee). A popular form is compensation or compensation for profits lost as a result of the violation.

This, of course, requires proof that there was an actual loss. This can range from minimal amounts to incredibly large amounts, depending on what the employer can prove that the damage was suffered by a court. Does the agreement prevent you from doing a very different job than you did? Given the difficulty of quantifying the exact harm of the employer, as well as the difficulty of enforcing such a judgment against an employee, in most cases employers seek injunctions against their former employees. In order to obtain an injunction to enforce a non-compete obligation against a former employee, the employer must prove that the non-compete obligations protect an employer`s investment in its employees. Often, an employer goes to great lengths to train a new employee and give them the experience they need to succeed. Non-compete obligations prevent these employees from resigning and passing on their newly acquired know-how to one of their former employer`s competitors. Employees negotiating a non-compete obligation with their employer should only accept those conditions that are actually necessary to protect the employer`s interests. 2. Do I have to accept a non-compete obligation? Did the employer provide you with additional compensation or benefits in exchange for obtaining your consent to sign the non-compete obligation? Proving that the agreement is not linked to a legitimate commercial interest is the most effective way out of a non-compete obligation.

The purpose of any non-compete obligation is the protection of trade secrets. If you can prove that you didn`t have to access trade secrets in your previous role, you should be able to accept a job at any company you want. So what happens if you breach a non-compete obligation and receive a cease and desist letter? First of all, do not ignore the letter. In most cases, companies negotiate an exemption from your non-compete obligation in exchange for compensation or other consideration. The threat of prosecution is buffering. But if you ignore the letter, you risk being prosecuted for intentional violation of non-competition because your former employer will claim that you acted despite being informed of a violation. So, if you receive a cease and desist letter for a non-compete obligation in Virginia, contact a lawyer immediately. Probably. Your employer can also demand so-called “lump sum damages” if these are specified in the non-compete obligation. The lump sum compensation is a fixed amount that the employer and the employee agree to as compensation if the employee fails to participate in the contest. However, not all lump sum damages are legally enforceable. Again, it depends on the facts of each case and the law of each state.

Probably not. Most courts require you to accept the terms of a non-compete obligation – e.B. by reading and signing. It is usually not enough for the employer to simply tell you that they are there for you to be bound by their terms. Or, if you have acquired certain confidential knowledge that you would inevitably use in the course of your work for your new employer, a court may consider this a legitimate reason to maintain a non-compete obligation. The best thing to do would be not to have a non-competition clause at all. Otherwise, you should try to limit it as much as possible in terms of geographical scope and duration. Limit it tightly to the area where the employer is really concerned about you working — not the entire industry or industry. For example, you could ask that the limit be for clothing retail space if you work in a clothing store, as opposed to retail in general, which would cover a very wide range of possible jobs that really have nothing to do with each other.

The aim is to limit the agreement to what is necessary to protect the employer. You should also consider requiring severance pay in the event of involuntary termination. Disputes over non-compete obligations rarely begin with a legal dispute. In most cases, your former employer will first send a termination and forbearance letter stating that they believe you have breached your non-compete obligation and asking you to stop working. Your former employer can then apply to a court for a declaratory judgment stating that the non-compete obligation is valid and enforceable. Sometimes. Again, based on the facts of the individual case, the employees were able to sue for “unauthorized interference with business relationships.” This legal right applies to cases where an employer has cost the employee an order because it has attempted to enforce a non-compete obligation that is not legally enforceable. Sometimes, these claims for “unauthorized interference” can result in significant damages being awarded to the employee for the employer`s exaggerated efforts to prevent him or her from finding another job. Another way to circumvent a non-compete clause is to prove that your employer has behaved illegally or unethically towards its customers.

In general, an employer will not want these issues to be raised in a court case, so they can waive your non-compete obligation if you have evidence of these behaviors. As we saw in the previous question, the duration deemed appropriate is usually analyzed in conjunction with the other factors. For example, if the non-compete obligation is intended to protect valuable information, reasonable duration is the period during which the information has value. If your employer presents you with a non-competition clause and you decide to sign the contract, you agree not to compete with your employer after the end of your employment relationship. In addition to preventing you from signing an employment contract with a competitor of your former employer, non-competition clauses can prevent you from doing the following: you thought the non-compete obligation should be like the employee manual or tax forms. Everyone signs it, no one reads it, and the company doesn`t really apply it, does it? What happens if you violate a non-compete clause under U.S. law? Many things can happen to you if you breach a non-compete obligation, including a lawsuit, but it can also happen that nothing happens to you. Today, non-compete obligations are controversial and are more likely to be rejected by the courts and law of most U.S.

states. It`s not enough that your employer simply doesn`t want you to bring your skills and abilities to a competitor. There must be a good reason not to compete. For example, if the employer has introduced you to all of their best customers, they may have a legitimate interest in preventing you from going to a competitor and attracting those customers. The goodwill developed in relation to the customer relationship gives the employer a competitive advantage. They may want to prevent you from taking advantage of it, so they are entitled to protection. Although non-compete obligations are analyzed under state law and each state is different, there are some common factors in the courts to determine whether a non-compete obligation is appropriate: There are three possible outcomes if you breach a non-compete obligation. Whether a non-compete obligation satisfies these requirements is decided by the courts on a case-by-case basis. One of the most common disputes about a non-compete obligation concerns the adequacy of the duration and geographical scope of the agreement, which often requires an analysis of the uniqueness of the skills required for the workplace.

For example, a non-compete clause that prevented an orthodontist from working for one year with a competitor within a 100-mile radius would likely be considered more reasonable than a clause that prevented a bartender from working within a 500-mile radius for 5 years. Does the employer have a legitimate interest which it protects by the non-compete obligation? 14. If the non-compete obligation I have signed is enforced, it means that I cannot earn a living at all. What must I do? Another common form is lump sum compensation. Lump sum damages are usually stipulated in the non-compete obligation in the event that an employee violates the non-compete obligation. If the non-compete obligation is valid and enforceable, you, as a former employee, may be required to pay pecuniary damages in the amount specified in the non-compete obligation. However, the courts have the option of deciding whether the amount is reasonable before asking them to pay. Not so fast.

Virginia companies are increasingly suing former employees who signed non-compete agreements and joined a competitor. .