Adobe Acrobat
6 things to know about noncompete agreements.
Learn why companies use noncompetes
Understanding noncomplete agreements
- Under a noncompete agreement, you aren’t allowed to go to work for your current employer’s competitors.
- Noncompete agreements are often used to protect a company’s trade secrets from rival businesses.
- An unreasonably strict noncompete agreement can be challenged in court.
1. What is a noncompete agreement?
If you take a job in a highly competitive industry, your employer might ask you to sign a noncompetition agreement, or noncompete agreement, before you start your employment. A noncompete agreement prevents you from working for a competing business in the same field as your former employer for a set period of time.
You may also be asked to sign a nonsolicitation agreement, which similarly blocks you from seeking out business from customers on your current employer’s client list.
2. How long do most noncompete agreements last?
On average, noncompete agreements stop former employees from taking a new job at a competing company for anywhere from six months to a year. However, in some high tech fields where employees have access to extremely sensitive information about new technologies, noncompete agreements could last as long as two years.
3. How strict is a noncompete agreement?
Many workers’ rights organizations consider noncompete agreements to be restrictive covenants which limit employees’ ability to advance in their careers. In response, some states have begun to regulate the enforceability of noncompete agreements. For example, in California, North Dakota, and Oklahoma, state laws make noncompete agreements impossible to enforce.
Other states, like Oregon, Washington, and Illinois, have banned the use of noncompete clauses in employment contracts for workers earning less than a certain salary.
In 2021, President Joe Biden issued an executive order instructing the Federal Trade Commission to crack down on unfair use of noncompete agreements. Before you sign a noncompete agreement, seek legal advice from an employment attorney in your area to understand your responsibilities under the current law.
4. How do I get around a noncompete agreement?
Your employer can’t make you sign a noncompete agreement, but they can choose to not hire you if you refuse. If you do decide to sign, depending on the employment laws in your state, you can challenge the noncompete agreement in court if you feel that the noncompete agreement is unreasonable.
5. What can make a noncompete agreement unreasonable?
Courts look at multiple factors to decide whether a noncompete agreement is enforceable or not:
- Legitimate business interest. Will the employer’s business be harmed if your noncompete agreement is not enforced? If you’re a computer programmer going to work for a rival startup, maybe. If you’re a barista taking a better job at a different coffee shop, probably not.
- Length. How long is the agreement in effect? A noncompete agreement with an unusually long time frame is more likely to be thrown out by the court.
- Compensation. Did your employer agree to pay you a higher salary or give you additional benefits in exchange for your signature? If they did, a court may decide that since you were compensated for signing the agreement, you must abide by it.
6. How to digitally sign a noncompete agreement.
How employees can sign a noncompete without picking up a pen.
If you decided to send a noncompete agreement to an employee, you can create an electronic signature and add it to the agreement using Acrobat’s free Fill & Sign tool. Just upload a PDF of the agreement, the employee will authenticate their signature, and send it back to you straight from the app using the Share function.
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