Under what conditions is a non-compete agreement enforceable?

UPDATED: Oct 15, 2014

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Under what conditions is a non-compete agreement enforceable?

I’ve worked at my current company for 20 months. The company is a PR firm that specializes in marketing communications for franchises. Yesterday, I was handed a non-compete agreement. It says that I’m not allowed to be a part of a competing business (stock holder, owner, employee) of any marketing communications firms that has part of all of its business from national franchises during employment and for a period of 2 years following termination, regardless of circumstances. There are over 8,000 national franchises in the country. We represent 20. No consideration other than continued employment is being offered for my signature. Is this enforceable?

Asked on October 15, 2014 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

An agreement like you describe is generally enforceable: it does not need to specifically state you are being given continued employment because that is an implicit reciprocal condition to such an agreement. As long as you are not fired or laid off--that is, as long as termination of employment is voluntary on your part (e.g. resignation or quiting)--the agreement will be enforceable against you. If you are fired or laid off, then the agreement is not enforceable.

The above said, two years is unusually long for a non-compete unless you are a senior executive. If you are not a senior executive, then were you to challenge it in court, there is a reasonable chance that a court would "blue pencil" it to reduce the duration to something more reasonable, such as 6 months.

And since a non-compete is only enforceable to the extent it is reasonbly necessary to spare the employer from a former employee's actual  competition, it is also possible--not a given, but possible--that if it were challenged, a court would blue pencil it to reduce it in terms of numbers or types of companies covered (e.g. maybe restrict it to franchise in similar industries to the ones the employer represents) or geographic scope.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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