I want to start my own business, but I signed my employer’s non-compete agreement

Question:

When a major firm in my professional services area hired me, I was shocked and did something I’d wanted to do for a long time: I told my former manager what I thought about her. She ordered me to leave her company immediately. No problem – I had a new job to go to.

I also have my entire future mapped out. I will work for my new employer for a year, learn all I can and then start my career. I told all my friends that my new job is the best ladder.

On my first day at orientation, my new manager gave me an employment contract that included a non-compete agreement. It was absolutely shocking. I’ve never seen one before.

I must have sat quietly for a few minutes as the manager asked if I had a problem. I shook my head “no” and signed it. I had no other choice. When I interviewed two weeks ago, I was asked, “If you get hired, how long do you expect to stay in this job?” I was asked the criteria. Question. I answered what I always tell interviewers: “I hope to hold this job for a long time and maybe even work at the company.”

Unless otherwise. I want to start my job in one year. But this non-compete says I can’t do my job until I’m at least 50 miles away from Anchorage a year after separation. How much legal trouble will I get myself into if I start my business? Can I terminate the non-compete? Does the fact that I get anything help me? Or when they gave me the job, they didn’t recommend me who didn’t compete?

Answer:

It may not be necessary to break the non-compete; The paper it is printed on may not be worth it. A lawyer can answer any questions you may have. However, if your employer discovers that you deliberately misled them, you will face other challenges.

Legal matters

Here’s what’s happening with competitors: On January 5, the Federal Trade Commission proposed a ban on all non-compete agreements, including those signed before the ban went into effect. The FTC has previously charged several companies with violating Section 5 of the Federal Trade Commission Act, which ‘prohibits unfair or deceptive practices or trade practices or practices.’ The FTC alleges that these employers’ non-compete agreements restrict employee mobility and unfairly harm competition.

Additionally, a bipartisan group of senators (Murphy, Young, Kaine, and Cramer) reintroduced the Workplace Mobility Act of 2023. This rule prohibits the use of post-employment non-compete agreements. Laws in many states also prohibit non-compete agreements.

The position of the employer

Although this legal landscape has changed, employers who consider non-compete agreements essential to their operations may challenge the FTC’s ban. Many employers, like the one you work for now, consider contracts that are not essential to their ability to survive. As a result, one in five U.S. workers work under a non-compete.

These employers fear that if they are stripped of their power to bind their employees to non-compete agreements, they will discover that they have learned to effectively hire and train employees, giving them trade secrets and proprietary strategies they have spent years training. And it has outgunned the competition.

If the act and ban become law, employers like yours will replace non-compete agreements with nondisclosure agreements that prevent their employees from using confidential, proprietary or trade secret information they acquire while on the job, or otherwise market anyway. Their former employer’s clients or customers.

Another problem

You will face other problems. If your employer discovers that you intentionally misled them during an interview, they can use the job at any time, giving them the right to fire you for any reason that doesn’t violate public policy. Worse, they may try to crush your new business after a year. why? Because they feel like you “used” them – and you did.

Finally, you will raise interesting questions. If they knew about the non-compete, they probably didn’t take the job or told your previous manager. Most employers, however, do not tell applicants all the policies they must sign on the first day. Also, you had a tip. They could have refused to sign the non-compete, left and looked for a new job. You may still want to do that before your new employer replaces non-competes with non-disclosure and anti-solicitation agreements.

Also, Anchorage is a small town. You have told several people of your desire to use your employer as a “stepping stone.” If your new employer finds out that you’ve taken it upon yourself to learn how to compete with them, you may make a formidable enemy who will do everything in their power to put you out of business.