I’m not an attorney, but I have discussed this with attorneys and
friends in the trade that have faced it, from both sides of the
As I understand it, and as I’ve seen it play out, the spirit of the
law is that an employer cannot interfere with the ability of a former
employee to provide for their own livelihood beyond the extent to
which they are allowed to protect their own. That’s where a courtroom
If you have serious questions as to the applicability,
enforceability and/or legality of a no-compete clause, you should
check with an attorney licensed in your town.
On the other hand… Beware of attorneys padding their bills. It
would not be completely unheard of for an attorney to recommend a
contract that he knows is completely unenforceable, just to create a
charge of $300 a page. I’m just sayin’.
My anecdotal experience is that the max the courts will consider
reasonable from the employer’s standpoint for a no-compete clause is
three to five miles (the same and adjacent zip codes), for one, maybe
two years if the employee is opening their own business, maybe even
less if they are just going to work for a competing employer. If it
is only for a year, the case probably wouldn’t even get to court
before the time expires. Another consideration, an employer trying to
prevent a former employee from getting a job (or creating jobs in the
case of starting a business) in these days of high unemployment may
not be looked upon favorably by a court, or the neighborhood in
general. At any rate, a no-compete contract case can be tough for an
employer to win, unless there is employee theft involved as well.
A former employee initiating direct contact with the former
employer’s customers by taking and using a full or partial customer
list (even a memorized phone number), taking molds or waxes, a price
list or design secrets isn’t just a violation of a no-compete clause,
it can be argued by a competent attorney that it violates laws
applying to employee theft. An employer doesn’t need a no-compete
clause, or any other type of contract to pursue legal remedy for a
case involving employee theft of physical or intellectual property,
they just have to prove it. In such a case, the side that has the
best records and best proof of their claim can usually prevail. One
might think that a no-compete clause might help clear the legal
muddy water or help to bolster a case like this, so even though on
it’s face, such a clause may be unenforceable, it might not be a bad
thing to have, if you think you may have problems later.
So, just like any other legal aspect of doing business, keep good
records and consult an attorney if you have serious questions, from
either side of the contract.
Personally, as an employer, I would never ask a prospective employee
to sign such a thing. We entrust our employees day in and day out
with pretty much all of our life savings and everything we have
worked for to get to the point we can become employers. Making a new
employee sign a contract like that right off the bat could easily set
up an atmosphere of mistrust, negativity and even paranoia, and might
very easily keep the very best people from joining the team, imho.
As a prospective employee, I wouldn’t sign one either. Too much
handwriting on the wall. They’re telegraphing how they view their
employees and may even be giving a little glimpse of how they treat
former employees, however they might get to that point. I’d just go
to the shop across the street. Or open my own place. Maybe even
across the street if there isn’t one there yet. The competition for
good help and trusting clientele shouldn’t be too tough.