Break Away From The Pack

Can a noncompete agreement stop you from starting your own firm?

| May 24, 2021 | Business And Commercial Litigation |

Noncompete agreements are less popular than they once were, but they’re sometimes still included in employment contracts. Especially for those working in sensitive positions, including financial professionals with access to client information, noncompete agreements are a standard part of working for certain companies.

If you have grown tired of being an employee and want to start your own firm, you probably worry about what that noncompete agreement you signed means for your business aspirations. Can your employer prevent you from starting your own firm through a blanket noncompete agreement in your employment contract?

Multiple factors influence the enforceability of a noncompete agreement

Different states have different approaches to noncompete agreements. The state that you work in now and where you intend to do business when starting your own firm will affect the enforceability of the noncompete agreement from your employment contract.

In California, for example, the courts do not enforce such agreements. Other states may sometimes enforce them by temporarily stopping someone from working in another position or starting a company of their own. If you believe the agreement may be enforceable under state law, then the next step is to evaluate the terms of the agreement.

Are they reasonable and fair? Noncompete agreements that last for an extended amount of time or that don’t have geographic limitations may be too broad to enforce in court. Some people hoping to branch out on their own may be able to fight back against the enforcement of an unfairly broad noncompete agreement. Others may need to examine the agreements and structure their exit from the company and future business plans carefully to avoid violating their contract.

Reviewing your contract with an experienced attorney is an important step toward determining what you need to do to protect yourself from litigation as you plan to start your own firm.