Employers often ask their key employees to sign non-competition agreements, commonly referred to as non-compete agreements. North Carolina law is quite strict in refusing to enforce such agreements in an employer-employee context. In fact, North Carolina law requires a judge to carefully scrutinize the terms of an employee’s non-compete agreement prior to enforcing it.
What is a Required for a Non-Compete Agreement?
A valid non-compete agreement must be:
- in writing
- reasonable as to time and territory
- made a part of the employment contract
- based on valuable consideration
- designed to protect a legitimate business interest of the employer
North Carolina law provides that an employer has the right to protect its customer contacts and confidential business information, but this is tempered by the restriction of imposing an unreasonable hardship on the employee. Therefore, the restrictions on the employee cannot be broader than is necessary to protect the employer’s legitimate business interest.
Non-Compete Agreements in North Carolina
North Carolina courts have held on numerous occasions that an employer cannot restrict an employee from working in a capacity unrelated to that in which the employee worked for the employer. For example, a non-compete agreement is likely unenforceable if it prohibits an employee from working for a competing business if the employee is performing duties for his new employer that are different than his prior employment. The rationale for refusing to enforce such restrictions is that the restrictions go beyond that reasonably necessary to protect the employer’s legitimate business interests.
However, as with many areas of the law, courts often will enforce a somewhat overboard non-compete agreement when the employee knows all of the inner workings of the employer, such as pricing strategies and bidding practices.
In reality, the courts look at each business and each employee separately when deciding whether to enforce a non-compete agreement. As an employer, you want to make sure your non-compete agreements are not overly broad. Otherwise, you run the real risk of the agreement being completely unenforceable. As an employee looking to get around a non-compete agreement, it pays to consult an experienced attorney to scrutinize your non-compete agreement because there have been many cases where non-compete agreements have been ruled unenforceable even though the employee voluntarily signed the agreement.
Our Raleigh Law Firm Can Help with Your Non-Compete Agreement
If we can help your company in drafting your non-compete agreements or, as an employee, in reviewing your existing non-compete agreement, call 919-615-2473 or contact our Raleigh law firm. It pays to have counsel who is familiar with business law and who has both successfully drafted non-compete agreements for employers, but also successfully advised employees as to the non-enforce-ability of their non-compete agreements.
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