In certain industries, non-compete agreements are a routine part of the process of bringing a new employee onboard. While it just may seem like another piece of pre-employment paperwork, not every non-compete agreement is the same when it comes to its enforceability. Our attorneys explain how non-compete agreements work in North Carolina and in what situations they may be deemed unenforceable.
What Is a Non-compete Agreement?
A non-compete agreement is a type of agreement that restricts employees of a business from working for a competitor or otherwise competing with the business they are currently working for. It may also limit an employee from working for a competitor after voluntarily quitting their current position.
A non-compete agreement may determine that the employee signing the agreement will not work in a certain geographic area for a certain period of time after leaving the company. For example, an employee may not get a job in a similar company within a 30-mile radius from their current employer for up to 6 months after quitting. These terms may vary from industry to industry.
What Factors Make a Non-compete Agreement Enforceable in North Carolina?
In general, North Carolina courts view non-compete agreements with scrutiny during a challenge. Non-compete agreements may be enforceable only when the restrictions it places on the future employability of a worker are not excessively wide in scope and truly reflect the business’s needs to protect its interests.
Some of the basic requirements for this type of agreement to be enforceable in North Carolina are (1) the agreement must be in writing; (2) it must be reasonable as to time and territory restrictions; (3) is a part of an employment contract; (4) it is based on valuable consideration and (5) it is meant to legitimately protect your business interests.
Is a Non-compete Agreement Still Enforceable if You Are Laid Off?
In North Carolina, there is no clear position concerning the enforceability of non-compete agreements in the event an employee is fired. The courts may analyze non-compete agreement challenges on a case-by-case basis and try to balance out the employee’s and the business needs to determine whether the agreement is fair and should be enforced or not. It may be worth consulting an attorney to determine whether your non-compete agreement is still valid even after you were laid off.
When Should I See an Attorney?
If you are an employer looking to enforce a non-compete agreement violation or an employee looking to challenge a non-compete agreement that is unfair, your first step should be to seek the help of an attorney. At Davis Legal, PLLC, we understand contracts and business law and can offer the right advice for your case. Contact us and request an initial consultation to discuss your situation by calling 919-756-6437.