Many employment agreements place restrictions on what you can do after your employment ends. Sometimes employers and employees mistakenly call all post-employment restrictions “non-competes.” But some restrictions can be non-competes and others may not be. If you’re considering whether to sign an employment agreement, or if you want to know what the terms in your employment agreement mean, it’s important to know the difference.
What’s a non-compete clause?
A “non-compete” refers to terms that restrict your ability to work for a competing employer. Most non-competes state that you can’t work for other employers that compete, directly or indirectly, with your employer’s business. The non-compete period starts when your employment ends and typically continues for certain period of time, which can be months or years. Some non-competes also have geographic restrictions, which forbid you from working for employers in a specified area.
What’s a non-solicitation clause?
A “non-solicitation” refers to terms that restrict your interactions with others. Like a non-compete, the non-solicitation period starts when your employment ends and typically continues for a certain period of time. But a non-solicitation clause doesn’t stop you from working for competitors. Some non-solicitation clauses may forbid you from asking former co-workers to join you at a new workplace. Other non-solicitation clauses may forbid you from doing business with your former employer’s vendors or contractors. If you work in sales, be particularly mindful of a non-solicitation clause that forbids you from soliciting or doing business with your former employer’s clients or customers.
Are non-competes and non-solicitations enforceable?
Some employment agreements only have non-competes. Other agreements will have both a non-compete clause and a non-solicitation clause. Not all non-competes and non-solicitation clauses are enforceable. When non-compete or non-solicitation clauses have unreasonably broad limitations, they can be challenged in court. If you have concerns about the enforceability of a non-compete or non-solicitation clause in your employment agreement, be sure to consult a lawyer first. Violating a non-compete or non-solicitation clause can have severe legal consequences.
A few states, like California and Colorado, have laws that forbid most non-compete clauses. By comparison, Minnesota and most other states allow non-competes, so long as the non-compete isn’t unreasonably broad. To avoid issues with their employment contracts, some employers don’t use non-competes at all and instead rely on non-solicitation clauses. So while it’s possible you may not be forbidden from working for a competitor, there may still be non-solicitation clauses that strictly limit who you can do business with.
Contact Our Minnesota Employment Lawyers
The experienced employment lawyers of Wanta Thome PLC help employees understand, negotiate, and challenge non-compete and non-solicitation clauses in employment contracts. If you have questions about a non-compete or non-solicitation clause, or if a former employer is threatening you with a lawsuit for breach of a non-compete or non-solicitation clause, make sure that you understand your rights. Contact us for a free initial consultation.