Violations of noncompetition agreements can become costly

Employers having their new employees sign noncompetition agreements (NCA) has become increasingly popular over the past few decades. Two of the most common reasons that an employer may have one of their workers sign an NCA are either out of goodwill or to protect trade secrets.

These types of agreements are generally structured to go into effect once an employee has parted ways with the company he or she worked for.

When litigation surrounding an NCA is brought in front of a judge, it’s often done for one of two reasons.

In one instance, a company may sue an employee for having violated the terms of his or her agreement. In another situation, a worker may accuse an employer of having written the NCA far too broadly so that it restricts the former employee from being able to land a position that doesn’t violate the terms of the agreement.

When it comes to the latter, it’s important to remember that NCAs are only considered to be valid if an employee is given something of value in exchange for signing it. If you’re being newly hired for a job, then most judges would consider having you sign a NCA in exchange for receiving a job is enough. Long-term employees must instead be offered a promotion or some other incentive in kind.

In order for an NCA to be considered valid, it’s also important that the agreement is not overly restrictive in terms of scope. It’s important that it is not too broad in terms of its geographical limitations, company interests or time applicability.

Important to a judge is whether the agreement is set to remain in effect for far longer than the information is valuable. Whether it’s deemed to be written far too broadly geographically speaking will depend on the nature of the business and an employer’s place in it as well as the employee’s role in the company.

A judge will also look at where the employer’s interests lie. It may be valid for a company to want to protect their trade secret, time or cost investment spent on building a certain company culture. When an NCA is overly restrictive and restricts even some of the most mundane activities, a judge may rule that it’s invalid.

If you’ve been accused of having violated an NCA, then a Melbourne attorney can provide guidance in your legal matter.


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