What is a non-compete agreement and its implications?

On Behalf of Dunlap Fiore, LLC |

Louisiana residents may be interested to know that more and more companies are instituting and enforcing non-compete agreements. A non-compete agreement is essentially a contract that an employee agrees to upon being hired by a company that lists stipulations on where and/or how long an employee that leaves the company must wait before they can work for any of that company’s competitors.

Typically, such agreements are usually reserved for upper management, executives and employees of technology companies and firms. Their purpose is to help limit the dissemination of carefully guarded trade secrets that give a company an edge over its competition.

Lately it seems that the number of companies that are choosing to include non-compete clauses in their new hire contracts has been on the rise and the growing trend is showing no signs of abatement. Not only is that the growing trend but it is being adopted by companies that are choosing to institute such regulations in the low wage sector.

A perfect example of this is a popular nationwide sandwich delicatessen that includes a clause in its new hire contracts that prevents any of its sandwich makers from working for any other employer that sells sandwiches within a three mile radius from the restaurant at which they used to work for a period of no less than two years. It is not just sandwich makers that have to contend with this, but also nail stylists and even maids.

A recent research study revealed that though the trend of including non-compete agreements is slowly but surely migrating to the low wage sector, it is still mostly predominant in the engineering and technology sector and by those in the upper bracket salary pay grade, which makes up about 30 percent of all non-compete agreements in the workforce.

Enforcement of such agreements also does not seem to be an issue. According to the research study, just about 10 percent of workers who are legally bound by a non-compete agreement attempt to get it struck from the hiring contract.

Source: The Washington Post, “The rise of the non-compete agreement, from tech workers to sandwich makers,” Lydia DePillis, Feb. 21, 2015