Non-Compete Agreements Signed Before the First Day of Work Are Not Valid
With very few exceptions, your employer cannot tell you what to do and what not to do while you are not at work. In an age where many of us respond to work-related emails around the clock, it is easy to feel like your work is controlling you even on your days off and that you are on duty every minute of every day. Imagine if your former employer could control you even after you quit working for them. Far from being a dystopian nightmare, that is the idea behind non-compete agreements. A non-compete agreement, also known as a restrictive covenant, is a legally enforceable agreement specifying things that a former employee is not allowed to do for a set period of time after they stop working for the employer. Just where is the line between fair business practices and unnecessary meddling in a former employee’s life, though? If you are involved in a business dispute related to a non-compete agreement, contact an Alabama business law attorney.
The Theory Behind Non-Compete Agreements
In many professional fields, especially those related to the development and sale of high-tech products, employees may become party to highly specialized and privileged information regarding the products and the company’s plans to develop new technologies. Think of how closely Kentucky Fried Chicken guards its recipe of “eleven secret herbs and spices;” a competitor could spend years experimenting with combinations of eleven seasonings that would taste good on fried chicken and eventually come up with something similar to KFC’s proprietary blend. Now think of how much more closely you would guard your trade secrets if you were making life-saving medications.
Alabama case law has been clear, though, that non-compete agreements signed before the employee begins working for the company are not valid. Employers should show employees a copy of the non-compete agreement they are expected to sign, but the employee should not sign the agreement before their first day of work. If they do, and the company later sues the former employee for violating a non-compete agreement, the court will decide in favor of the former employee, on the grounds that the agreement is not valid.
Details of the Ameritox Case
Ameritox made medical products for urinalysis drug screenings. Eric Dawson began working for Ameritox on April 11, 2011. On April 7 of that year, the week before he started his job, he signed a non-compete agreement, saying he would not work for any other company that competed with Ameritox for a year after he stopped working for the company. When Dawson and Ameritox went to court about a dispute over the non-compete agreement, the court ruled that the agreement was not valid, because Dawson had signed it before his first day of employment with Ameritox.
Let Us Help You Today
A business law attorney may be able to help you resolve disputes related to a non-compete agreement or other type of business agreement. Contact the Alabama business & corporate law attorneys at Cloud Willis & Ellis for a consultation.