Effective Use of Utah Non-Compete Agreements

September 08, 2012

An increasingly common part of doing business is dealing with non-compete agreements. Salt Lake City companies may use the contracts to protect their intellectual property, trade secrets, customer lists and other business interests.

Non-compete agreements make it difficult for former employees to find similar employment in a particular field. Employees should carefully consider an agreement's conditions before signing these contracts, and may be able to challenge the terms of a non-compete agreement in court if its restrictions are unreasonably broad.

Corporations frequently request professional employees from doctors to high-level sales staff to sign non-compete agreements that restrict where and when they may work once they leave. Sometimes, these restrictions are so limiting they go beyond the reasonable scope of protecting the company's interests.

Time Frame

In Utah, companies may require employees to sign non-compete agreements. Companies can determine and negotiate the length of time a former employee must wait to either start a business in a similar field or find similar work at a different, competing firm.

Most courts agree that a period of one or two years is a reasonable amount of time to protect a business's trade secrets and other interests. Attempting to enforce a five-year restriction on the other hand may be seen as too long and thus unreasonable.

Geographical Limitations

Likewise, companies may use non-competes to restrict where a former employee may take a new position. Such a restriction helps a company to keep its competition from encroaching on its geographical region.

While non-compete agreements that include a limited geographical restriction are usually upheld in court, agreements that stipulate nationwide restrictions are more easily challenged as overreaching.

How to Negotiate a Less Restrictive Non-Compete Agreement

Employees may be able to negotiate a less restrictive contract by challenging how or if the stipulations protect the company's legitimate business interests. For example, an employee may be able to negotiate a shorter time frame for the non-compete. Valid reasons may also underpin requesting a limited geographic area especially in a larger city. It may be unreasonable for an employer to request that the non-compete cover all of Salt Lake City when the business is limited to several neighborhoods.

Additionally, Utah requires that all non-compete agreements meet several criteria to be considered valid. The agreements must:
- Be negotiated in good faith and necessary to protect the company's business interests
- Have reasonable restrictions as to scope, time frame and geography
- Be supported by consideration at the time of signing
- Give the employee time to consider its stipulations

If these criteria are not met, it may be possible for the employee to challenge the terms of a non-compete in court. Courts generally do not allow a non-compete agreement to prohibit a former employee from finding work that uses their professional abilities.

In the instance that a non-compete agreement you signed prevents you from finding a job, please contact an experienced employment attorney who can advise whether there may be grounds to challenge the terms of the non-compete agreement in court.

Article provided by Stavros Law, P.C.
Visit us at www.stavroslaw.com/