How to Get Out of a Non-Compete Agreement
Deciding how to get out of a non-compete agreement can be tricky. It's important to understand what it is and why employers use them. 4 min read
Updated July 10, 2020:
Deciding how to get out of a non-compete agreement can be tricky. It's important to understand what it is and why employers use them. A non-compete agreement is a formal contract between an employer and employee. Non-compete agreements are often signed in the hiring stage or when an employee is advancing in the company to a role with more responsibilities. Most companies insist on them as a condition of employment.
What Is a Non-Compete Agreement?
These covenants generally cover three principals:
- The employer expressly prohibits employees from working for competitors. Competitors are typically either specifically named or described by industry or title, and further defined by geographical area. Often a time period for prohibition is also defined.
- Former employees are barred from solicitation. This means former employees cannot contact the employer's customers, employees, or suppliers on behalf of a competing business venture.
- Employees agree to confidentiality. Former employees are barred from disclosing proprietary information owned by their former employer, including client lists and trade secrets.
Can I Ignore a Non-Compete Agreement?
Simply ignoring a non-compete agreement is never recommended as a way out. You will potentially be burning the bridge of trust with your former employer, ruining the possibility of future recommendations, using the employer as a prospective client, or at the very least creating awkward interactions at industry and networking events.
Ignoring a valid non-compete agreement could be far more costly: Employers would have grounds to file a lawsuit, where you could be found liable for financial damage you caused the company plus attorney fees and court costs. Your former company may also obtain an injunction from a judge, ordering you to immediately stop your agreement violations.
How Do I Challenge a Non-Compete Agreement?
Signing a non-compete agreement as a condition of hire does bind you to the agreement. However, you may qualify for a legal challenge. Most employees will not have the resources to take up the fight in court, but the following challenges will make it more likely for your challenge to succeed if:
Terms are not violated. If you show your new job does not violate the precise terms of your contract, the former has no basis to a legal challenge.
There are no legitimate business interests at stake. Employer overreach is a major problem with non-compete agreements. In states enforcing such agreements, legitimate business interests are commonly defined as one of the following:
- Trade secrets
- Confidential business/professional information of value to the company
- Substantial relationships with clients
- Business trademarks, geographic location or defined territories
- Specialized or extensive training
The terms are unreasonable. Legal definitions vary, but most agree the terms set forth by the employer must not be overly broad or vague, nor should they be set up to give the employer an unfair advantage. They should also not be overly penalizing to the employee, such as preventing work in an entire sector for an unreasonable length of time.
The contract is breached by the employer. Most states recognize non-compete agreements are only one part of an employer contract; the other is the employer's responsibilities to you. Check your contract line-by-line for what was agreed upon in terms of employee compensation, and if any part of their obligations went unfulfilled, your obligation may be relieved.
The contract was never signed. Ask for a copy, and see your personnel record if you do not recall signing.
The information is in the public domain. If your former employer purchased leads from another company, a chamber of commerce, or another public source, this information cannot be protected under a non-compete.
You were terminated without cause. If you were part of a mass layoff or terminated without having done anything wrong, some courts (but not all) might see this a valid reason to void your agreement.
The employer tricked you into signing. If verbal promises were made but never followed through with, or if you were told parts would not be enforced that then are, you have a case. Getting verbal agreements in writing, perhaps by emailing a manager for clarification, will help your case.
The employer acted illegally or dishonestly. Showing proof that your former employer is involved in shady practices will likely lead to a settlement. Handle this situation with care, and avoid threats.
Public health or safety is at stake. If you are a firefighter and one of only a handful of people in a region with specific certifications, the court will likely decide that preventing you from working would be against public interest.
If you need help with getting out of non-compete agreements, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.