How Does a Company Know if You Violate a Non Compete? | Can an Employer Breach a Contract
How would an employer know if you violate a non-compete? Suppose you were either an employee or an independent contractor in sales or healthcare. In that case, it’s very likely that they would ask you or require you to sign a non-compete contained within the employment agreement or independent contractor agreement.
What is a Non-Compete Clause?
A non-compete will prohibit the professional from providing a specific service for a particular time within a specific geographic area. Let’s say you’re a doctor. It’ll say, maybe you’re in internal medicine, you can’t practice in internal medicine for one year within 10 miles of your primary practice location.
What Happens if You Violate a Non Compete?
Violating a legally enforceable non-compete agreement can result in serious consequences. If you breach the terms, your former employer may seek a court-ordered injunction to halt your competitive activities and file a lawsuit to recover financial damages. Consequences of violating a non-compete agreement can also include legal fees, loss of income, and damage to your professional reputation. To avoid these potential repercussions, it is essential to fully understand the terms of your non-compete clause and ensure compliance with its restrictions, including duration, geographic scope, and the specific activities or industries covered.
Or, if you’re in sales, let’s say you’re in software sales. It would say you can’t work for another company in software sales for one year within all the counties in the Southern half of whatever state you’re working. If you’re in sales, the non-compete will be much broader than if you were some healthcare provider. You’re generally not just servicing a minimal area when you are in sales. Whereas if you’re a doctor, you’re not going to have patients coming to you from five hours away. They’re usually almost always within a 10 to 15-mile radius of where the office is located. So, you sign the non-compete, the contract ends, you’re moving on, and then for whatever reason, you accept a position that violates the non-compete. How would the employer ever know?
How Would the Employer Know if You Violated the Non-Compete?
Well, some simple things. First, if you’re a healthcare provider and you’ve signed the non-compete, and it says you can’t work within 10 miles of the office, and then you establish an office within nine miles, that’s easy. If you’re with a smaller group, it’s much more likely that they will follow up than if you are with some huge healthcare conglomerate. For instance, Suppose you worked for a hospital network that has 20 hospitals in a city, and then you move on. In that case, I can tell you from experience that it’s much less likely that they’re going to follow up versus if you worked in a three-physician office. They’re likely to keep track of where you go after the fact. Now, let’s say you’re outside of the area.
How Do I Know if I Signed a Non Compete?
To determine if you’ve signed a non-compete agreement, begin by reviewing the documents you received when starting your job, such as your employment contract, offer letter, or any separate agreements. Non-compete clauses may also be included within employee handbooks or confidentiality agreements. If you’re uncertain or unable to locate the relevant documents, consider reaching out to your human resources department or consult with an attorney to help you understand your obligations. Remember that non-compete agreements should clearly outline the specific restrictions, geographic scope, and duration to be considered enforceable.
Should You Inform Your Employer About Your Past Non-Compete?
In the non-compete, maybe it says you can’t provide services to anyone you provided services for while you were working. Well, that’s a little trickier. Unless the patient or business informs your past employer that they’re working with you, it’s probably unlikely that your old employer will know that you violated the agreement. Signing an agreement just expecting to break it is a bad idea. Even if it’s most likely unenforceable, you’re potentially going to have to either litigation or go to arbitration. Suppose you think it should be unenforceable, which could be costly if you lose.
In that case, the employer could obtain a temporary restraining order or an injunction that would stop you from working within that radius or period. So, once an employer finds out, whether they come after that provider or not just depends. When I’m doing contract reviews, people can say, oh, this is a very litigious owner. Like they go after everyone if they violate something, whereas others say, well, it’s fair. They don’t care at all. So, it will depend upon the employer. However, I strongly consider not signing any agreement that you are not happy with, and do not sign a contract that you’re just going to say. You know what, I’m just going to risk it and break it after the fact. I think that’s poor decision-making.
Negotiate the Terms of the Non Compete
If you want to change the terms of the non-compete, negotiating it before signing the employment agreement or independent contractor agreement is the time to do it. And it’s also based upon leverage. Suppose you’re just out training, new to sales. In that case, you don’t have as much leverage to change the contract as somebody with a ton of experience and proven positive professional performance. In that scenario, if you bring a ton of value to a company, they would be much more likely to amend the agreement in a non-compete way that is advantageous to the employee.
Signing an Agreement Just Expecting to Break It Is a Bad Idea
So, how an employer finds out if you’re violating it? It’s just word of mouth. They could come up and check on you. If it’s in healthcare, they could look at the medical record and see that you’re providing services to that past patient. There are several ways of doing it. So, I suggest never sign an agreement that you’re just going to anticipate breaking. It’s just a bad idea.
Other Blogs of Interest
- Can a Company Make You Sign a Non-Compete After Employment? | Employees Noncompete
- Should You Tell a Future Employer About a Non Compete?
What Are Non-Compete Agreements? | Noncompete Agreements
If you are a healthcare professional about to take on a new job, you may be wondering about non-compete agreements. What are they? Who needs them? What should you look out for when signing one?
While non-competes may seem like overly severe restrictions to most people, you need to abide if your state enforces them. This then forces every worker to seek to understand non-compete agreements. Here is everything you need to know about non-compete agreements.
Employer vs. Employees: What Are Non-Compete Agreements?
A non-compete agreement is a contract between an employer and employee in which the employee agrees not to compete with the employer during or after employment within a particular geographic area for a specific period. Non-competes are usually signed when an employee first starts working for a company, but they can also be signed later. Noncompete agreements are also known as a covenant not to compete, restrictive covenants, or non-competition clauses.
Before signing a non-compete agreement, it is important to review the clause thoroughly with the help of a physician contract lawyer. This is primarily because non-compete restrictions can have significant impacts on your career. For example, it can prevent you from getting a job in your field within a specific radius for years if you leave your position- which may happen due to unavoidable circumstances.
How Does a Non-Compete Employment Agreement Work?
Noncompete agreements are most common in fields where there is a lot of competition, such as sales, marketing, and technology. They are also common in industries where employers want to protect their trade secrets or other confidential information.
In the field of medicine, a non-compete is often used to prevent physicians from leaving their jobs and opening up a competing practice nearby. Non compete can also be used to prevent:
- Nurses from starting a competing home health care business
- Pharmaceutical sales representatives from going to work for a competitor
- A veterinarian from opening up a competing animal hospital
- Dentists from opening up a competing dental practice pediatricians from going to work for a competing pediatric practice
What Are the Legalities of Non-Compete Agreements
Non-compete agreements are governed by state law. This means that the terms of a non-compete agreement can vary depending on which state you practice. For example, some states require that non-competes be in writing, while others do not.
State laws require the employer to provide valid consideration, reasonable time frame, geographical scope, and activities to be restrained to have a legally binding agreement. There are also states that don’t make a non-compete enforceable at all. For example, North Dakota, California, and Oklahoma.
What to Look Out For in a Non-Compete Agreement?
When you are reviewing a non-compete agreement, there are a few key things you should look out for:
The Time Period of the Non-Compete
The non compete length should be a reasonable amount of time, such as one to three years. The longer the time frame, the more likely it will affect you if you leave your job.
The Geographical Scope of the Noncompete
The non-compete geographic scope should be limited to the areas where your employer does business. The radius can vary depending on the location where you work. For example, if you practice in rural areas, 15-50 miles could be reasonable. While if you practice in urban areas, 2-15 miles can be considered appropriate.
The activities that are restricted should be clearly defined. They should not be more than what’s needed to protect the employer.
Advantages of a Non-Compete Agreement on Employees
There are some advantages to signing a non-compete agreement, such as:
- You may be able to negotiate a higher salary or other benefits, such as more vacation days. This is due to the consequences that follow if your contract is terminated and you need to get a new job.
- If you do leave your job, you will have a clear understanding of what you can and cannot do. This can prevent you from getting into legal trouble down the road.
- Your employer may be more willing to invest in your training because they know you are less likely to leave the company and use the acquired skills to compete with them.
- Non-compete agreements can give you a sense of job security and stability.
- If you are laid off or fired, you may be entitled to severance pay.
Disadvantages of a Non-Compete Agreement to an Employee
There are also some disadvantages to signing a non-compete agreement, such as:
- It can limit your ability to get another job in your field within a specific region if you are laid off or fired.
- You may be stuck in a job you don’t like because you are afraid of breaching your contract.
- If you do breach your contract, you may be sued by your employer. This can be expensive and time-consuming, even if you win the case.
Note that you don’t have to agree to the non-compete agreement as presented to you by your employer. You should evaluate which parts are critical to you and which parts you’re more flexible with. Next, aim to negotiate on how you and your employer can meet in the middle. Remember, you need a strategy and a reasonable one to do this successfully.
If you are asked to sign a non-compete agreement, it is crucial to make sure that the agreement is fair and reasonable. The reasonableness of a non-compete agreement depends on many factors, such as the duration of the agreement, the geographic scope, and the type of job you have.
Before signing a non-compete agreement, make sure you understand all these terms and conditions. This way, you can protect yourself and your future career. The first step to doing this is by consulting an experienced employment lawyer who can review and advise you on the agreement.
Chelle Law has helped many healthcare workers review and negotiate their non-compete agreements. He would be happy to help you understand your rights and options under the law.
Can an Employee Refuse to Sign a Non Compete? | Employees Non-Compete
Can an employee refuse to sign a non-compete? If you’re a professional, it’s very likely the employer will make you sign an employment agreement or perhaps an independent contractor agreement. And most of the time, a non-compete will be included in the employment agreement. A non-compete is a restrictive covenant, and a restrictive covenant essentially stops the employee from doing something either during or after the employment relationship has been terminated. Suppose a professional has been presented with an employment agreement containing an amount of non-compete. In that case, the potential employee can undoubtedly say, I’m not going to sign the non-compete if you want me to be a part of this company. And then, the company can tell you that unless you sign the non-compete, we will not offer you the position.
So, it’s a matter of negotiation and leverage. Most employers will not say, fine, you don’t have to sign a non-compete unless the employee is going to give something up. It is standard in the healthcare profession, sales, and other industries to have a non-compete. It’s just a standard part of being a professional. So, because your employer is asking you to sign an employment agreement containing a non-compete, they’re not out to get you. It’s just a normal part of doing business. Now, another question is whether that non-compete is reasonable or even enforceable or not. There are a few states where non-competes are entirely unenforceable. First, you need to check and see if your state is one of those. And then next, any state will take a reasonableness standard in determining whether the non-compete is enforceable.
Is Non-Compete Enforceable or Reasonable in your State?
So, they’re going to say, alright, what is the scope? Meaning, what is the non-compete stopping you from doing? And then how long does it last? And then what is the geographic restriction? Like, how far? What is the territory where you cannot continue doing what you are doing for that employer? There will be a point for many of the people I assist with contract review where they say.
Because of the situation that they’re in, meaning they’re in a city that they grew up in, that they have family in, their kids go to school there. There’s no scenario where they would be able to move away from the city. The non-compete can be an absolute deal breaker. And others are moving to the city specifically for the job. They have no ties to the town, and they could care less if they have to move away after the contract ends.
Scenario Where the Non-Compete is Important
And so, in the first scenario where the non-compete is extremely important, as I said before, it can be a complete deal breaker. They can say, look, I’m not signing a contract with a non-compete. And most of the time, the employer will say, well, we’re going to find somebody else. Whereas it could be someone who could care less about the non-compete, it’s not even an issue. So, can the employer force the employee to sign a non-compete? Absolutely. They can make it a part of the employment contract.
And obviously, the employee will have to sign the employment contract before they start. But it certainly is up to the employee whether to sign it or not. If you’ve signed the non-compete, you must be willing to live up to and deal with that non-compete. I mean, many times, I get calls from people who have signed an employment agreement that contains a non-compete. Then after the contract terminates, they say, oh my God, this is such a terrible non-compete.
How to Get out in a Terrible Non-Compete?
How do I get out of it? Well, it isn’t easy. If it’s in a state where they’re entirely enforceable, that’s easy. We can work out a deal with the employer, and almost always, it’s an amount the employee has to pay to get out of the non-compete. Or if it’s considered unreasonable in some respects, meaning, as I said before, it’s too long. It restricts too large of a territory. The scope of it is like, let’s say you’re in software sales, and then the non-compete thinks you can’t make sales anywhere in any industry for a period. Well, that probably would not be enforceable. It should be specific to what you’re doing for the employer.
And let’s take a physician, for example. Maybe you’re in internal medicine, and you could be a hospitalist. You could be doing urgent care, ER, or primary care. Well, suppose you’re a hospitalist for an employer. In that case, you should be able to do those other things, not just stop you from practicing medicine. So, you want to ensure it’s specific to your scope in that particular employer. Well, that is a little breakdown of whether an employee must sign the non-compete or what are some ways to get around it.
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