Non-compete agreements are a hot topic. Non-compete agreements or provisions seek to prevent an employee from competing with a former employer. Employers consider them necessary to protect the time they have put in training employees and the knowledge acquired by employees. Employees may consider them unfair where economic times are hard enough without making the search for employment even more difficult. While most states allow employers to include non-compete agreements as part of their employment contracts, non-compete agreements have fallen out of favor with states who are imposing greater restrictions and limiting the scope and terms of them.
Non-compete agreements have been in the news lately in Massachusetts. It initially appeared as though Massachusetts may ban non-compete agreements entirely as too limiting on trade and commerce. However, it now appears as though a compromise may be reached which will further restrict non-compete agreements without outright banning them. In New Hampshire, non-compete agreements are allowed, but there are statutes restricting them. A recent statute that went into effect in 2012, is N.H. R.S.A. 275:70, which requires employers to provide non-compete agreements to both applicants and current employees experiencing a change in job classification prior to extending a job offer or before the change in job classification.
California is one of the few states that bans non-compete agreements with very limited exceptions. Non-compete agreements are seen as an impediment to free trade. California’s restrictions on non-compete agreements doesn’t seem to have harmed commerce in the Silicon Valley area and may even be part of the reason for its success. In fact, some research suggests that Silicon Valley was able to become more successful than the high-tech industry along Route 128 in Massachusetts because of the lack of enforceable non-compete clauses in the Silicon Valley.
As long as there is a demand for employees with specialized skills and knowledge, such as in the high-tech industry, employers will seek to retain those employees and try to protect their companies by requiring employees to sign non-compete agreements. For help navigating your employment contract or for more information, please contact our office or call to schedule an appointment.