More firms requiring non-compete agreements

July 08, 2013

Fenwick & West employment practice co-chair Dan McCoy is featured in an article in The Wall Street Journal's Marketwatch titled “More Firms Requiring Non-Compete Agreements,” which focuses on shifting regulations and enforcement issues surrounding non-compete agreements between firms and employees.

The article asserts that many employees who remained in their jobs during the recession might be considering jumping ship as the economy’s health improves – but they would be wise to consider non-compete agreements that they might not even remember signing, since those documents could hold them back from switching to a job at a competing organization or position. Recommendations include carefully reviewing – and even negotiating – non-compete agreements before accepting new employment. The article goes on to imply that, although many states broadly enforce non-compete agreements, many are also introducing limitations on when contacts can be applied – and how these limitations may negatively impact organizations when an employee seeks work with a competing firm.

With technology making it ever easier to store, and share, sensitive information, non-compete agreements are increasingly considered a necessity to locking down valuable trade secrets and intellectual property. But counter-arguments claim that sweeping interpretations of non-competes stifle competition and hold back economic growth by preventing workers from moving on to bigger and better salaries, titles and responsibilities.

Fenwick’s Dan McCoy underscores the value in transparency about existing non-compete agreements when employees look at taking a new position with a potentially competitive organization. In the article, McCoy notes that “a company may be more willing to challenge the agreement on behalf of the person they want to hire if they’re aware of the issue from the start,” adding, “otherwise, the worker could be hit with a legal injunction and fees, leaving them without a job at either company.”

The full article is available through the Marketwatch website.