Non-Compete Clauses Are Overrated, Especially For Small Businesses
When you operate a small business, you have so many responsibilities that require your undivided attention that airtight employment contracts are not a priority. You would like to offer your employees a written contract, because doing so gives you an advantage over competing businesses with which those same employees might apply for jobs. When you print out sample contracts from the Internet, they often include non-compete provisions that state that the employer has the right to take legal action against the employee if, shortly after the end of the employment relationship indicated in the contract, the employee takes a job with another company that competes directly with the employer. Are such provisions even legal? If they are, is it worthwhile to include or enforce them? A Washington DC small business lawyer can answer your questions about non-compete clauses and other aspects of employment contracts.
“Vindictive Ex” Is Not a Good Look for a Small Business
According to Gene Marks of The Guardian, litigation to enforce non-compete clauses in employment contracts is mostly for show, and it is mostly a show of pettiness. Do you really want to be the company that sued a former employee because he dared to get another job in his chosen career field after he stopped working for you? Do you really want a reputation as the company that runs employees out of town if they dare to quit? Even if “supervillain” is part of your brand identity, do you really have the budget to do this?
Most small businesses do not. If you are mad that a former employee set up her own business that competes with yours or applied for a job with one of your direct competitors, then wellbeing is the best form of revenge. You have little to gain by filing a lawsuit alleging violation of a noncompete agreement, even if the court rules in your favor.
The DMV Is Over Non-Compete Clauses, Anyway
Even though litigation to enforce non-compete clauses is counterproductive for most companies, large corporations with a big budget for lawsuits tend to include such clauses just because they can, or at least, they used to before federal and state laws began cracking down on this practice. In the summer of 2021, President Biden signed an executive order authorizing the Federal Trade Commission (FTC) to investigate abusive practices involving non-compete contracts. The research that led to the drafting of this executive order revealed that non-compete clauses are prevalent in employment contracts for employees who do not hold bachelor’s degrees, namely, the employees whose work opportunities would be most limited if they were to abide by these non-compete agreements. Meanwhile, state legislation restricting the use of non-competes is also becoming widespread. Virginia, Maryland, and the District of Columbia are among the places that have adopted such legislation.
Reach Out to Us Today for Help
A business law attorney can help you draft employment contracts that protect your interests as well as those of your employees. Contact Tobin, O’Connor & Ewing for help today.