Thursday, October 26, 2006

Maryland Non-Competes: Things to consider before you sign one.

Starting with the assumption that reasonable non-compete agreements are enforceable in Maryland, what should you do if your employer asks you to sign one? If possible, you should do the following:

1. Try to get out of signing the agreement in the first place.

2. Try to narrow the agreement's terms. Find out which competitors and geographic ares your employer really cares about. Limit the agreement's reach to those terms.

3. Suggest that what your employer really wants is a non-solicitation agreement, i.e., your promise not t0 raid the company of its key employees.

4. Demand compensation. If your employer wants you to get out the industry for a period, your employer should pay for it.

5. Hire a lawyer to review your agreement and meet with you before signing away your right to a livelihood. Employers get legal advice -- so should you. Employers often put highly unfavorable terms -- such as attorney-fee shifting provisions -- in non compete agreements. Consult counsel to know your rights.


Anonymous said...

Here's something that I wonder about - Is there any history of litigation or precedent in Maryland with respect to no compete agreements as they relate to suppression of an employees ability to advance their career. In other words, if Company X expects Joe to remain faithful to the organization, then is it not the case that Company X must faithfully provide equitable (with respect to Joe's peers) growth opportunities to Joe over time. For example Employee Joe works in a company in a given industry for 10 years. During that time, he can document that he has only occasionally been given raises that matched cost of living, has never been promoted (while others that do less challenging work have been), was threatened with termination months after the company suggested he go on FMLA (albeit over 3 years ago), and amongst other things was given a new promising job in the company but a replacement for his old job never found (or even looked for) causing Joe to have to return to his old job. In other words, is it plausible that if an inequity in the level of opportunities presented to Joe by Company X over a decade of employment can be proven, that he has just cause to go work for a Competitor Y EVEN THOUGH there is a no compete signed many many years ago. If Joe is not able to advance his career at a reasonable and equitable rate at Company X, then should he not be able to work for a competitor that will advance him.

Unknown said...

Sadly, I am aware of no case in Maryland that allows an employee to escape a non-compete agreement because his or her employer treated him or her unfairly. I, do suggest, however, that you review your situation with an attorney to develop a plan of action for limiting the sting of the non-compete.

Anonymous said...

What can an employee do to get out of signing a non-compete? Are there ways of negotiating? Can one outright refuse?

Unknown said...

Negotiations are all about leverage. The more they want you the more you can reduce the non-compete obligations.