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Don’t Fear the Non-Compete Agreement

Written By Steve Potestio | May 24, 2014

One of the most misunderstood and reviled aspects of employment in the State of Oregon is the Non-Compete Agreement. They scare individuals and present employers as paranoid, though there is a strong business case for them. I have been under strict non-competes as an individual and I have had to enforce them as an employer. In Oregon, non-competes are legal and until recently, pretty strict.

If you are not going to enforce it, why have it? Enforcing it means going to court.

As an employer, consider what you are really trying to protect, and if a non-compete the best way to do it. As an employee, should you sign a non-compete, or be afraid to?

Individuals need to know and understand their rights under non-competes. Here’s what they should and should not worry about:

  • To some degree, non-competes are not worth the paper they’re printed on. You cannot, however, completely disregard them either. By signing you are agreeing to abide by its statutes. Be sure you understand what you are signing.
  • The more detailed they are, the greater chance they will hold up in court. General requirements like not working for a competitor in the creative industry are not as scary as saying you cannot work for X Company.
  • Whoa…hold up in court? Who said anything about suing? If an individual violates a non-compete, their former employer can file suit to stop them from competing. This can land you in court.
  • Judges generally view non-competes as “un-American”. They believe one has a right to earn a living.
  • If the non-compete is very specific on what you can’t do, and you are doing it, you could still be in trouble.

As an employer, before you implement a policy requiring employees to sign a non-compete, you should:

  • Understand the message it sends, both good and bad. The good: We take our business seriously and don’t want you to screw us over. The bad: We already don’t trust you and are drawing an employer/employee line in the sand.
  • If the employee goes to work for a competitor after leaving your firm, and they are not trying to hurt your business, do you really care? For example, if a copywriter goes to work for a competitor does this really hurt your business? If it does, you may have other problems.
  • If you are not going to enforce it, why have it? Enforcing it means going to court.
  • Isn’t a non-solicitation agreement what you are really after? You don’t want former employees soliciting business from your clients, but competing is fine, right? Again, as long as they are not maliciously trying to hurt you, implement a non-solicitation agreement and leave it at that.
  • Unless the employee is maliciously trying to hurt your business, the non-compete probably won’t hold up in court anyway.
  • Whoa! Court? Yes, to enforce a non-compete, you would ultimately have to take your former employee to court.

Are these questions, anguish and confusion worth it? Is this the way to start a new employee relationship?

I work in a very competitive industry where employees could easily leave and take relationships with them. I’ve chosen to not use these agreements. This creates a stronger employer-employee bond, and it means I have to build a stronger company to hold up in case someone does leave and take work with them. I’m OK with that. The strong survive.

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