Employee Non-Competition Clause

Business By lyndya Updated 12 Jul 2011 , 1:38pm by JoanieB

lyndya Posted 10 Jul 2011 , 3:29pm
post #1 of 14

Anyone have employees sign a no compete clause in their employment contracts??? what is the standard term of non competition after employment relationship is severed??? thanks

13 replies
luddroth Posted 10 Jul 2011 , 4:03pm
post #2 of 14

Varies state to state and in different industries. Most non-competes specify a time period and a geographic area. One year and in the same town and surrounding area would probably be ok, but you should check local laws. Most non-competes also preclude the employee from taking any customer lists or contacting any of your customers directly.

CWR41 Posted 10 Jul 2011 , 4:06pm
post #3 of 14

This might help:
http://cakecentral.com/cake-decorating-ftopict-707624-non.html+compete

I'm sure you can find similar applicable threads.

bakingpw Posted 10 Jul 2011 , 4:31pm
post #4 of 14

I absolutely had non-compete clauses which in addition to the issues already mentioned above, included NOT using my recipes/formulas (many of which were my mothers).

cakegirl1973 Posted 10 Jul 2011 , 4:45pm
post #5 of 14

Depending on your state and how you draft the non-compete clause, it could be found unenforceable, if you needed to enforce it. In my opinion, it would be well worth paying an attorney for an hour of his or her time to help you with this issue so that you are properly protected.

jason_kraft Posted 10 Jul 2011 , 6:08pm
post #6 of 14

MD tends to uphold reasonable noncompetes, but I agree that it's important to talk to an attorney to draft the clause.

You should also have a trade secret protection policy if you are worried about things like recipes and customer lists leaving with former employees -- IMO in this industry this is more important than a noncompete.

Here's some more info:
http://www.bizjournals.com/washington/stories/2004/03/01/focus4.html
http://library.findlaw.com/1998/Jun/1/127422.html

JoanieB Posted 11 Jul 2011 , 1:14am
post #7 of 14

A well known shop in my area states right on her website that her employee contract says no compete for 8 years after employment.

victoria7310 Posted 11 Jul 2011 , 1:38am
post #8 of 14

Wow, 8 years seems a bit unreasonable!

JoanieB Posted 11 Jul 2011 , 1:40am
post #9 of 14

Personally I think she's super full of herself icon_lol.gif But, she probably only does that because she has no intention on teaching anyone anything she just wants grunts I guess.

jason_kraft Posted 11 Jul 2011 , 2:09am
post #10 of 14

A judge would probably throw out a noncompete in this industry with an 8 year term as overly harsh, or at least greatly reduce the term.

AnotherCaker Posted 11 Jul 2011 , 3:14am
post #11 of 14

If I ever hired anyone, you bet your butts they'd be grunts. Washing, prepping pans, rolling fondant, sweeping, that's about it! I would get to do all the fun stuff.

mama_amy Posted 11 Jul 2011 , 3:47pm
post #12 of 14

I have never worked at cake decorating (hope to some day when I get more experience) but I have worked a few jobs that have had non-compete clauses. They typically stated I couldn't take client information with me when I left and I had to wait 1 year after employment ended to work in the same industry.

scp1127 Posted 12 Jul 2011 , 9:29am
post #13 of 14

I had a large company make me sign a no-compete clause in the presence of their attorney. Years later, they took away our full commission and offered us $25,000 salary on a day's notice. We all left on the same day when we found a competing company willing to come to our area. The old company let everyone work but me. They threatened an emergency injunction to shut down the new company. I was transferred for a few months until a local employment attorney heard of my situation. I received a very large settlement. My old company boss talked to me later about the situation. He said that they had hundreds of employees sign them for years and I was the only one to challenge it. With those odds, this was a good financial move on their part, as no-competes were illegal in our state.

Usually only employment lawyers know the law for your area. My new company's lawyers were stumped as to its legitimacy. My husband hired another MD in his practice and that no-compete was legit. You must give compensation (consideration) in order for a contract to be valid. In this case, a substantial amount of money was given in return for the no-compete. And the terms had to be reasonable and in line with the compensation.

Just saying, before you have someone sign one, and especially if you plan to enforce it, make sure it is legal from an employment attorney. Just because your neighbor, the divorce attorney, tells you it's ok, it still may not be legal. The charge was "Interfering with my right to work". Mistakes will cost the offending employer a considerable sum of money including wages lost plus the highest interest rate, and punitive damages. And that doesn't count the attorney and court fees.

JoanieB Posted 12 Jul 2011 , 1:38pm
post #14 of 14

scp1127 has a great point. That got me curious about the lady in our area with the 8 year no compete clause. Apparently while these are not illegal in Arkansas a lot of employers get themselves in trouble by making the demands too excessive such as too much time or too much geographical area and the courts end up not enforcing it. So definitely check with an employment lawyer before anything.

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