A non-compete agreement is “a legal agreement or clause in an agreement that prohibits an employee from engaging in competition with the employer after the employment period has ended.” Tennessee and Missouri presently permit non-compete contracts, but their increasing unpopularity has caused many to question whether they can be disregarded. Your employer’s ability to enforce a non-compete clause. Getting help from employment lawyers knoxville tn can help.
Non-Compete Agreement Controversy
The purpose of a non-compete clause is to prevent previous company staff members from disclosing confidential data or trade secrets they acquired while employed there. Numerous employers require hourly employees, salaried employees, independent contractors, and consultants to sign such agreements. While both Tennessee and Missouri are going to uphold a reasonable non-compete agreement, there is increasing controversy surrounding them.
What makes a Non-Compete Agreement ‘Enforceable?’
Most states that permit non-compete contracts view them negatively and typically interpret them in favor of the employee. State laws typically define an ‘enforceable’ non-compete clause as having legitimate territorial and time restrictions that are not unduly restrictive to the employee’s best interests. The courts can declare unreasonable provisions unenforceable.
Here’s an example: two employees of a local pizzeria hone their skills under the tutelage of a particular employer before leaving to start their own pizza business. Their former employer needed them to sign non-compete agreements prohibiting them from departing and utilizing their skills with another local employer. It stated: “You cannot work for another pizza establishment within 20 miles of my business for at least two years.”
If the pizza business owners were sued by their former employer for establishing a competing pizza parlor within 20 miles, the court might have to determine whether the non-compete clause was reasonable.
- What potential peril does the former employer face, if any?
- Does a 20-mile radius impede the ability of the two former employees to earn a living?
- Is the two-year requirement equitable and reasonable?
- Would compliance with these terms impose an undue burden on the former employers? Would they be required to relocate or commute to a nearby city in order to hone their skills?
Non-compete agreements are valid in Tennessee and Missouri under current state and federal law, but the restrictions they apply must be reasonable. The courts determine the factors that render them “reasonable” or “unreasonable.”
“When determining whether an individual agreement is enforceable, the court typically considers the following factors: (1) the potential danger to the employer; (2) the hardship that would be imposed on the employee if the contract is enforced; (3) if the agreement is backed by adequate assessment; and (4) if there is any public interest in hindering enforcement.”
Gaming Finder 