I really liked Steve Boese’s article on non-competes in the fistful of talent recruiting blog. Steve considers the non-compete as HR’s equivalent to a prenuptial agreement. Steve also hit on what is most effective about a non-compete whether it is enforceable or not:
Just the threat of potential legal action and the leverage a non-compete appears to give the employer often causes employees to think twice about jumping ship to one of their organizations competitors – or at least for making the jump in one step.
The most critical time period for a non-compete, like a prenup, is when the employee is considering whether to sign it or not. Yes, there may be attack on it enforceability on down the line but the employer like the spouse has an agreement that employee signed an agreed to follow. I can not overstate how important this concept is in non-compete litigation. The employee always had the right not to sign though in most cases this means they won’t get the job or could be fired for not signing it in certain circumstances.
Judges and juries deal with cases all the time where one party or another is not complying with an an agreement they signed. Almost everyone can identify with this circumstance, whether it was a bad paint job, a lemon for an automobile, or the DVD player that didn’t work. Judges and juries like to make people and companies comply with the agreements they signed. The same holds true for the non-compete or other post-employment covenant. The most critical point in non-compete litigation is when the employee signed it. That cannot be undone.