%26quot;While acting as, and for (24) months after his/her termination, the Employee shall not and agrees that he/she will not, directly own an interest in, operate, join, control, or participate in or be connected as an officer, employee, agent, independent contractor, partner, shareholder, or proprietorship, firm, association, person, or other entity soliciting orders for, selling, distributing or otherwise marketing products, goods, equipment, and/or services which directly compete with the Company at existing Company's customers or customers where the Company's proposals are pending without the written consent of the Company.%26quot;
Am opportunity has come my way (with a small start up company) that I am considering pursuing. It is in the same state and the same industry, however they do not share any clientele. However that could potentially be the case in the long term.
1) Does this clause apply in my situation? Does the situation change if I am offered stock with the new company?
2) If it does apply, how enforceable is this clause, especially since it is for 2 years? I've heard that clauses are only enforceable if they are within reason.
My interpretation of the clause lies in the word %26quot;directly.%26quot; I suppose this word kind of limits the scope of the clause. I don't think it will apply to me but I am unsure and wanted others' opinions.
Thanks.
Non-Competition Clause Question?
Does the clause apply? The answer is - it depends largely upon the state you reside in. Many of these no compete clauses are really not worth the paper they are written on, as they generally will not hold up in court. So why do companies write them? Because they are counting on the fact that their employees will not do the necessary legal research to find out how binding these clauses are in their state.
This is contract law, and as such is governed by each of the 50 states, and not the federal government. So if you are working in the state of Washington, the state courts are very, very pro-employee and will probably throw out this clause if you had to go to court. On the other hand, if you live in Virginia or Maryland, chances are the courts are more conservative and will side on behalf of the employer.
From my research, what I have seen been held up by the courts is clauses of no compete for 6 months or so. However, I believe 24 months of non-compete is unreasonable, and believe that most courts would rule the same.
However, it is up to you to do the necessary legal research.
Hope this helps.
Non-Competition Clause Question?
I would ask your HR.
