While many may view noncompetes as unethical and questionable, there is some good news. Just because an employee breaks their noncompete does not mean they are in peril of consequences. A court will decide whether to uphold noncompete clauses depending on the situation.
There are a few criteria that courts usually use to assess noncompetes:
- If the clause is reasonable
- If the business has a legitimate protectable interest
- If the noncompete makes it impossible for the employee to make a living
- How long the terms of the noncompete run for
- If the clause prevents employees from doing work unrelated to that specified in the contract
- If the employer benefits by having the noncompete, at the employee’s expense
- If the compensation is not worthwhile
In many cases, a court will throw out a noncompete. This is usually because the terms are unreasonable, or there is insufficient compensation. Clauses that include no compensation usually get immediate dismissal.
One could say that the advantage is with the employee. The employer does need to provide good reason and compensation, and not restrict the employee’s opportunities. However, a noncompete is often used against employees.