A non-compete agreement is an employment contract preventing an employee from working for a competitor during or after their time working for that company. Non-compete agreements additionally prevent employees from becoming direct competitors themselves in their future career moves.
At Kirk, Kirk, Howell, Cutler & Thomas we know there can be many challenges facing individuals who wish to move forward in their career endeavors from a company with whom they’ve signed a non-compete agreement. Our non-compete agreement attorneys are here to help with everything you need to know regarding your rights as an employee under a contract of a non-compete agreement.
The Purpose of Non-compete Agreements in NC
One of the most valuable assets for American businesses is their human capital. The knowledge and skills that employees contribute to the overall value of a business are integral to the financial, social, and emotional well-being of a company. While companies look to hire the most talented employees, the opportunity for employment comes with the stipulation of contractual agreements that protect the business’s intellectual property.
As a result of protecting the company from having its ideas and brand concepts brought to competitor companies, employers often ask their employees to sign non-compete agreements.
There are two scenarios when this occurs:
- when the employee is being hired
- after the employee is already working for the employer
North Carolina law looks at these two scenarios in a completely different manner. In general terms, North Carolina law protects the employer when a potential new employee signs a non-compete agreement, whereas North Carolina law generally protects the employee when a current employee signs a non-compete agreement.
Consideration in Non-compete Agreements for New vs. Current Employees
The difference between the two scenarios of a non-compete agreement lies in the consideration necessary to bind a potential new employee versus that of a current employee to the contract. “Consideration” refers to the benefit received by the employee in exchange for signing the non-compete agreement.
If there is insufficient consideration, or benefits to the employee, to support the non-compete agreement, then the non-compete agreement will be deemed invalid.
Pre-employment Non-compete Agreements
When it comes to potential new employees, North Carolina law tends to favor the employer when enforcing a non-compete agreement. This is because the law presumes that the potential new employee is in a good bargaining position that is equal to that of the employer when the non-compete agreement contract is signed.
In other words, the law presumes that the potential employee is in a position where they can refuse to sign the non-compete agreement if they so choose. The offer of employment alone is sufficient consideration– the benefit that the new employee is receiving– to support a non-compete agreement.
In essence, this all means that North Carolina law says that the potential new employee can just say “no” and refuse to sign the non-compete agreement. Unfortunately, the law does not account for the vulnerability we have as human beings when we are in need of employment.
At Kirk, Kirk, Howell, Cutler & Thomas We know that saying “no” to signing a company’s non-compete agreement is not a realistic situation for real people who fear the risk of losing a job opportunity in today’s market and economy. The potential employee is not likely to get hired for the job if they were to refuse to sign the company’s non-compete agreement, and the employer will simply move on to the next candidate in their large pool of candidacy.
Does the potential new employee really have equal bargaining power with the employer under such circumstances? In the real world where people are struggling to support themselves and their families, the answer is clearly “no.” Yet in a North Carolina court of law, more times than not they conclude this to be the case.
If you are an employee who felt pressured into signing a non-compete agreement contract during the company’s hiring stage for fear of losing your opportunity, it is important to secure knowledgeable legal representation with proven success in fighting non-compete agreements in North Carolina.
Non-compete Agreements for Current Employees
When it comes to current employees who are asked to sign non-compete agreement contracts by their employer, North Carolina law presumes that the employer has greater bargaining power. The basis for this is that the employee already has the job and cannot easily say “no” to an employer that is demanding that a non-compete agreement be signed without fear of consequences that may result in termination of employment if they do not comply.
Since the employee already has the job, North Carolina law concludes that keeping the job is insufficient consideration to support the signing of the non-compete agreement. In other words, if the employer says “you can keep your job if you sign this non-compete agreement” and the current employee signs it, then it is likely that the non-compete will be deemed to be invalid due to a lack of consideration.
The employee received nothing in exchange for signing the non-compete agreement– the employee already had the job, so additional consideration must be given by the employer to the current employee to support the validity of the non-compete agreement.
Additional considerations might be:
- a bonus
- a raise
- vacation benefits
- a higher commission rate
- other incentives that benefit the employee
Litigation often centers on whether the current employee did, in addition to keeping the status of their employment, receive any real consideration as a benefit in signing the non-compete agreement.
If you feel you were pressured into signing a non-compete agreement, were not given additional considerations by your employer, or have any other questions concerning a non-compete agreement you signed, contact Kirk, Kirk Law to review the details of your case.
Employee Rights to Get Released from a Non-compete Agreement
If, as an employee under a non-compete agreement contract, you violate the terms of your agreement, the company will sue you for damages. It’s important to secure legal counsel to review your contract details and plan the best course of action so you can be released from the non-compete agreement in a court of law.
Invalid Non-compete Agreements
We have seen numerous cases where a non-compete agreement has been ruled invalid due to the failure of consideration. However, every non-compete agreement is different. An inexperienced attorney could look over the issue of consideration and focus solely on the non-compete restrictions. This is simply a mistake and could be very costly for you, the employee.
It is recommended that you have experienced counsel with a proven record in business law and business contracts review your non-compete agreement to determine if the consideration offered in your case is sufficient. Oftentimes, we find that due to a lack of additional consideration, employees can be freed from the contractual demands of their non-compete agreement, allowing them to move on from their current company and explore other jobs and career endeavors in the field of competitors.
North Carolina’s Blue Pencil Doctrine
If you regret signing a new employee non-compete agreement or felt pressured into signing one while you were already working for the company, we believe you should not have to feel as though you are trapped and never able to move on to other future career opportunities with competing businesses.
Unfortunately, the state of North Carolina has affirmed the Blue Pencil Doctrine that significantly limits the court’s ability to rewrite, re-word, or strike down non-compete agreements.
Contact Raleigh’s Non-compete Agreement Law Firm
It pays to have counsel who has successfully drafted non-compete agreements for employers but who has also successfully advised employees as to the non-enforceability of their non-compete agreements.
If we can help your company in drafting a non-compete agreement or, as an employee, in reviewing your non-compete agreement, then please do not hesitate to contact our Raleigh law firm, Kirk, Kirk, Howell, Cutler & Thomas LLP.
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