Given today's tough economic times, simply finding a job can be a challenge in and of itself. Indeed, many individuals are so ecstatic when they finally land their dream job that they fail to adequately review all of the documents and/or employment contracts that their employers have them sign - a mistake they may not realize until too late.
For instance, many employers routinely ask new employees to sign non-compete agreements in Indiana, not to mention that many employment contracts also contain non-compete provisions.
In the most basic terms, a non-compete agreement is a contract signed by an employee that restricts him or her from working for a competitor of his or her employer. Obviously, these types of agreements can severely limit a person's ability to make a living should he or she part ways with his or her current employer.
However, Indiana employees need to remember that they may still have options available even if they unwittingly sign non-compete agreements, particularly when these agreements are considered unenforceable under the law.
Enforceability of non-compete agreements in Indiana
Indiana courts have long held that non-compete covenants in employment contracts are generally disfavored by the law, and as such, must be carefully scrutinized before enforced. Indeed, post-employment restraints - such as non-compete agreements - are examined with particular care since they are often the result of uneven bargaining power and because an employee will likely give little attention to the difficulties he or she may later face following the loss of the job.
Ultimately, in order for a non-compete agreement to be enforceable under Indiana law, it must be, above all, reasonable. When proving reasonableness, an employer must be able to prove two elements, which include:
- The employer has a legitimate interest to be protected by the agreement
- The agreement is reasonable in scope as to duration, geography and activity
As to the first element, Indiana law generally recognizes that a legitimate protectable interest is an advantage possessed by an employer, the use of which by an ex-employee would be unfair when competing with the former employer. This can include the use of confidential information such as customer names and addresses, but typically does not include general skills obtained by an employee in the course of his or her employment.
Additionally, a non-compete agreement needs to be reasonable as to duration, geography and activity. Essentially, this means that a non-compete will likely not be enforceable if it states that it is supposed to be effective for 30 years. Similarly, agreements that attempt to prohibit an ex-employee from competing with a former employee anywhere in the country are less likely to be found valid by the court, particularly if the employer only does business locally.
In the end, many individuals find it helpful to seek the counsel of an experienced employment law attorney when they have issues related to non-compete agreements. A knowledgeable attorney can review your particular agreement and help explain the various requirements for enforceability.