What recourse does a commission employee have if their employer doesn’t have enough work and has made them sign a non-compete?

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What recourse does a commission employee have if their employer doesn’t have enough work and has made them sign a non-compete?

Work in an industry that is pretty small. Business does about $500,000 in sales. 4 full-time employees including my self. All employees are 100% commission based. No paid vacation, no paid holidays, etc. That being said, the workload is decreasing and therefore everybody is suffering. The owner/president of the company is a poor manager and horrible business person. He did have the business sense to make us all (but one, his son) sign a non-compete agreement. It restricts us by “surrounding counties”. What recourse does he have if he can’t provide enough work for the employees to make a living? We all have a “specialty” or area of work. Some overlap. 2 of us in particular have nearly worked ourselves out of a job. If anybody could help with info pertaining to what our legal options are.

Asked on May 11, 2011 under Employment Labor Law, Kentucky

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

First of all, you have to recognize that no one "made" you sign a non-compete: you chose to do so. The option may have been to lose your job, which is not a good option, but you still voluntarily signed an agreement. You have to bear this in mind to recognize that non-competes, as contracts which parties voluntarily enter into, are generally enforceable.

That said, they cannot be open-ended as to time: a non-compete is only enforceable for a "reasonable" period of time. What this is various by the situation (e.g. the industry, employee's level or compensation, how specialized the job is, etc.), but a typical period might be six-months to one-year for all but high-level employees.

Second, the geographical area covered has to be reasonable, which will again depend on the facts (e.g. how large are the "counties" in question? What is the customer base for your employer? etc.).

Third, the non-compete can't stop you from working generally, only from more-or-less direct competition.

A non-compete which is too broad will often be reduced (called "blue penciling") by a court to a reasonable level.

You should have your non-compete reviewed by an employment attorney, to see to what extent it is enforceable--and to what extent it is not.


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