When Are Non-Compete Agreements Enforceable in Connecticut?

 Posted on September 27, 2021 in Business Law

Businesses have a number of methods that may be used to protect their interests. One issue that may need to be addressed is the possibility that an employee may leave the company and use their knowledge of the business’s operations, client base, or trade secrets to gain an unfair competitive advantage against the company. This issue may be addressed by having employees sign a non-compete agreement. However, employers will want to understand when these types of agreements may be used and when they can be enforced.

Enforcement of Restrictive Covenants

A non-compete agreement may place restrictions on an employee, limiting the types of companies they can work for, the positions they can hold, and the business activities they can participate in. If a former employee who had signed a non-compete agreement violates these terms, their former employer may take legal action, and they may ask that the person be required to follow the terms of the agreement or pay damages for any financial losses that occurred because of the violation.

To be enforceable, non-compete agreements will usually need to address the following issues:

• Consideration - An employee must be offered something of value in return for signing a non-compete agreement. In many cases, the initial offer of employment is considered to be sufficient consideration. However, if a person who is currently employed by a company does not have a non-compete agreement, continued employment is not considered sufficient consideration for a new agreement. In these cases, an employee will need to receive new consideration, such as a promotion, an increase in pay, or changes to the capacity of their employment.

• Scope of restrictions - The restrictions that are placed on an employee must be reasonable to protect the interests of the employer without unfairly limiting an employee’s ability to pursue gainful employment. These restrictions may address both the duration of the agreement and the geographic area where it applies. If the geographic restrictions are limited, such as prohibiting an employee from working in a specific city or county, they may last for a longer duration. If the agreement covers a larger geographic area, it may only be considered reasonable if it lasts for a brief period. Generally, an agreement may be enforceable if it lasts for no more than a few years and covers an area where the employer currently conducts or expects to conduct business

Contact our Greenwich Non-Compete Agreement Attorneys

At Ivey, Barnum & O'Mara, LLC, we can help your business draft non-compete agreements that will protect your interests. We can also provide you with representation in litigation to enforce these agreements. To get legal help with employment law and other related matters, contact our Connecticut employment contract lawyers at 203-661-6000 and set up a free consultation.

Sources:

https://www.cbia.com/resources/hr-safety/issues-laws/guide-to-non-compete-agreements-are-they-right-for-your-business/

https://www.ebglaw.com/wp-content/uploads/2021/01/Poppick-Faherty-Non-Compete-Laws-Connecticut-3-506-2779-2021.pdf