Non-compete clause disputes can arise when an employee begins working with another company after they have a signed a clause stating that they will only work for their current employer. A non-compete clause or non-compete covenant basically prohibits the worker from working for or with another employer.
Some non-compete clause disputes may involve:
- Failing to inform the employer of work or projects with other companies
- Hiring other workers while working for the employer
- Revealing company trade secrets or information to another party without authorization
- Providing competitors with access to company products or displays
Thus, most non-compete clauses revolve around protecting information that is protected or confidential. They may also focus on securing the employer’s work status with only one company.
What Are the Legal Penalties for a Breach of a Non-Compete Clause?
This depends on the nature of the breach. If the worker has begun working with another company, it can result in consequences such as:
- Termination from the company position
- Having to pay a damages award for losses caused by the breach of contract (lost profits, lost business contacts, and other losses)
- Other violations, especially violations of copyright, trademark, patent, or other intellectual property laws
Lastly, if the breach involved illegal actions (such as illegal insider trading or other white collar crimes), criminal charges and consequences may also result.
Are Non-Compete Clauses Allowed in All States?
Some states are contesting the idea of non-compete clauses, stating that it may be unfair to limit workers to employment opportunities in a contract. An example of this is California's ban on non-compete covenants. Thus, you may wish to check the laws of your state if you have any questions or concerns regarding a non-compete covenant. You may also wish to hire a lawyer if you need further advice.
Should I Hire a Lawyer for Help with a Non-Compete Covenant?
Non-compete clauses can often be somewhat complex. You may need to hire a employment lawyer if you need assistance with an employment or contract disputes, especially those involving non-compete language. Your attorney can help review the language to determine whether it conforms to your state’s laws. Also, a lawyer will be able to represent you if you need to appear in court for a lawsuit.