October 25, 2017 feature

The New Wave of Non-Competes

Are they enforceable?

By Joseph P. Beckman

The history of non-compete agreements might be described as a pendulum. The past five years have seen a significant movement in employer attempts to broaden non-compete agreements and limit employee protections.

A decision this year from the Federal Circuit, as well as other recent developments, suggests, however, that the pendulum is beginning to swing back in favor of employees by narrowing the employer enforceability of non-compete agreements.

As our economy became increasingly virtual, employers appeared to become more concerned about the potential for lower-level employees to harm their businesses by leaving for a competitor. A thumb drive with half a dozen spreadsheets can leave in a novice sales professional’s pocket and seriously damage his former employer’s business.

Companies reacted to these developments with higher levels of technology monitoring as well as a more widespread use of non-competes. Zeal to prevent secrets from going to competitors may have reached a surreal level of absurdity when Jimmy John’s included in the standard employment packet distributed to franchisees a non-compete restricting a franchisee’s hourly employees from working for any business that derives 10 percent or more of its revenue from the sale of sandwiches within three miles of any Jimmy John’s location.

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