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Non-compete Agreements in a Bad Economy

Posted by Frank Steinberg | May 29, 2009 | 0 Comments

Two posts on non-compete agreements caught my eye today.  They deal with the subject from differing perspectives but teach a common lesson.

The Lancaster Law Blog reminds us that in a down economy non-compete agreements are at once increasingly common and increasingly difficult to enforce.  As a result, businesses that rely upon them may be lulled into a "false sense of security."

The Virginia Non-Compete Law Blog, looking at things from the employee's perspective, validates the thought about a false sense of security  when it tells us that "employees should fight back" against the unwarranted enforcement of non-competes.

Non-competes serve a valid purpose when they seek to protect legitimate proprietary business interests.  But when they do no more than seek a business advantage by stifling prospective future competition, New Jersey courts will find them to be invalid.

In our practice we often see small businesses attempting to use "one size fits all" non-compete agreements bought over the internet.  Those often have deficiencies that make them problematic when applied to a specific business situation.  Frequently their biggest value is merely their deterrent effect.  Employees are dissuaded from fighting back not because they are wrong, but because of the expense of the fight.

In short, both of my fellow bloggers cited above are right.  If you are seeking to protect a business, be sure that your non-compete agreement is tailored to legitimate business needs or it may offer no protection at all.  If you are an employee faced with a non-compete, don't despair.  You may have more leverage than you think.

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...


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