I am being asked to sign a noncompete or a nonsolicitation agreement. Do I have to?
A noncompete agreement is a contract that an employer may ask an employee to sign that states the employee agrees not to compete with the employer within a defined geographical area for a limited time (typically 12 to 24 months) once that employee leaves the position. The agreement will usually spell out what types of competition are disallowed.
A nonsolicitation agreement is a contract that prohibits an employee from soliciting, or attempting to do business with, certain customers or clients of the employer for a limited time after the employee leaves the position. Both types of agreements, referred to as “restrictive covenants,” can impose significant limitations on employees’ future employment opportunities.
In states that follow the employment-at-will doctrine, and almost all states do, employers may require employees to sign such agreements under threat of termination if they do not. (A few states, including California, have laws that prevent employers from requiring such agreement.) Employers often present such agreements to employees during their first few days of work, after the opportunity to negotiate or reject the restrictive covenant has passed. Employees exploring a job change should always be proactive and ask the prospective employers whether they will be asked to sign a restrictive covenant.
It is critical that you seek experienced legal counsel if you are facing with such a choice in order to avoid putting yourself in a position where your future employment opportunities may be significantly limited if you sign such an agreement.
Employers must provide sufficient consideration to you, in the form of a new job or additional compensation opportunities in your existing job, for such agreements to be enforceable, but the determination of what constitutes sufficient consideration is very nuanced and can involve considerable expense.
Before signing anything, we recommend that you contact West Chester, PA attorneys Kunkle and Sennett. We can review the documents to ensure your future employment opportunities are protected. Call us at (610) 692-8911.
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