Is a non-compete valid?
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Is a non-compete valid?
I am now separating from a partnership in the graphics business. She is making me sign a non-compete clause for a 60 mile radius. It provides that I can not open a business, work for a business or compete in any way shape or form. In return I am receiving a home we shared paid for in full. Does this have legal merit if I sign?
Asked on August 22, 2013 under Employment Labor Law, Wisconsin
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Although courts do not favor these agreements, they do recognize that they may be necessary in order to protect an employer's competitive position. In otfder fo such an agreemnt to be upheld an employer must prove that:
- The agreement is supported by "consideration" (i.e.the employee received something of value in exchange for signing),
- The employer has a legitimate business interest in requiring the agreement, and
- The restrictions of the agreement are reasonable regarding time and place (i.e. duration and geographical scope); in other words the terms of the restrictions must be reasonable as to the period of time in which the restraint is to last and the territory which the restraint is to cover.
Based on the limited facts prsented, it appears that #1 and #2 have been met. However, as to #3, while a 60 mile radious may be reasonable, you don't give a time prohibition. The restraint cannot be open-ended; this means that there must be a period of time listed at the end of which the non-compete expires (e.g. 1-3 years is usual). Without such a time limitation, the non-compete would more than likely not be upheld.
At this point, you woud be well advised to consult directly with an employment law attorney before signng anything.
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