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Non-compete clauses and employment disputes

Many employment disputes do not come about until after an employee has left his job. These disputes often involve employment contracts and severance agreements. And there are moments when the employee in question provides an extremely important position that competing corporations become involved in the litigation.

Samsung and Acer, Inc., the fourth largest computer manufacturer in the world, both companies doing business in Indiana, are involved in such a dispute. A former Samsung executive now would like to work for Acer, Inc. and has been involved in a series of negotiations with the computer manufacturer. However, this executive also happened to have signed a non-compete' agreement and this has resulted in two giant companies going to court over a single person.

Non-compete agreements are often complex, contain a variety of provisions and exclusions, and are often written in what appears to be legalese. Usually such agreements were prepared by an attorney and it often requires another attorney accustomed to reading such agreements to understand what the contract contains.

Such attorneys familiar with employment law can dispute clauses in the contract that are illegal or in some way violate public policy. These same attorneys can also review such contracts in advance and explain what signing such agreements would mean for the individual employee.

Non-compete agreements cannot be written in such a manner that will severely limit and employees professional aspirations or are worded so broadly that it prevents an employee from working in a particular field. Such contracts need to be narrowly constructed and meet a particular need.

The above dispute is about to be tried in federal court. The outcome like most employment disputes will be dependent upon individual factors.

Source: Bloomberg Businessweek, "Acer Sues Samsung in U.S. Over Non-Compete Clause in Hiring Bid," by Tim Culpan, Feb. 24, 2012

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