Non-compete agreements are a common feature in many employment contracts. These agreements, also known as restrictive covenants, serve to protect employers from competition by limiting the ability of employees to work for rival companies or start their own competing businesses. In North Carolina, non-compete agreements are widely used, and they have been the subject of much debate. Here`s what you need to know about non-compete agreements in North Carolina.

What is a Non-Compete Agreement?

A non-compete agreement is a legal contract between an employer and an employee. The goal of the agreement is to prevent the employee from working in a competing business or starting a competing business for a certain period after their employment with the current employer ends. The duration of the non-compete agreement varies, but it is typically between 6 months and 2 years.

Why Are Non-Compete Agreements Necessary?

Employers may use non-compete agreements to protect their trade secrets, customer lists, and other confidential information. Such agreements can also ensure that employees do not take away clients or customers when they leave the company. Additionally, non-compete agreements may help employers protect their investment in training employees.

Enforceability of Non-Compete Agreements in North Carolina

The enforceability of non-compete agreements in North Carolina is governed by the state`s laws. The state`s courts apply a reasonableness test to non-compete agreements to determine their enforceability. To be considered reasonable, a non-compete agreement must be designed to protect the employer`s legitimate business interests. The agreement must also be reasonable in terms of its duration, geographical scope, and the activities that it restricts.

The scope of non-compete agreements can vary depending on the industry and type of employment. For example, a non-compete agreement for a salesman may limit their ability to sell products in a certain geographic area, while a non-compete agreement for a scientist may limit their ability to work for competing companies in a particular field.

What Happens If an Employee Violates a Non-Compete Agreement?

If an employee violates a non-compete agreement, their former employer can seek damages. In North Carolina, courts can award damages to an employer for any losses that result from the employee`s breach of the non-compete agreement. The damages may include lost profits, lost clients, or other financial harm.

Conclusion

Non-compete agreements are often used by employers to protect their business interests. In North Carolina, non-compete agreements are enforceable if they are reasonable in terms of their scope and duration. If an employee violates a non-compete agreement, their former employer can seek damages. If you are a North Carolina employer or employee, it is important to understand the enforceability of non-compete agreements in the state.