When an employee signs a non-compete agreement, they often wonder about its enforceability if they decide to quit. Understanding the legal landscape surrounding non-compete clauses is a must for both employees and employers.
What is a non-compete agreement?
A non-compete agreement is a contract wherein an employee agrees not to enter into competition with an employer after the employment period is over. The benefit of a non-compete agreement is that it works to protect the employer’s business interests from potential exploitation by former employees.
Enforceability of non-compete agreements
For a non-compete to be enforceable, it must be reasonable in scope and duration. The restriction should cover only the geographic area where the employer operates and be in effect for a time that is fair to both parties.
Another critical factor is consideration, as in what the employee gets in return for signing the agreement. Typically, a job offer is sufficient consideration, but additional incentives or benefits can also play a role.
The courts have held that the enforceability of a non-compete does not necessarily depend on whether an employee quits or gets fired. However, the circumstances under which the employee left can influence the court’s decision.
What happens if you quit?
Quitting your job does not automatically nullify a non-compete agreement. If the terms are reasonable and the agreement was signed under fair conditions, it is likely to be upheld. However, if quitting is due to unreasonable working conditions, the court might consider these when assessing the enforceability of the non-compete clause.
Read the fine print
While non-compete agreements can still hold up after an employee quits, the specifics of each situation play a crucial role. Employees should seek to understand the terms before signing and consider the potential legal implications should they decide to leave the employer.