Is Cooks bound to the non-compete agreement that she signed with RRG? Is this non-compete agreement a contract?
Non-compete agreements are covenants made in the course of employment or contracts of sale of businesses. The signee in the contract agrees not to compete with the current employer. The key goal of these agreements is to limit the rights of employees who sign the agreement. The employees are restricted from doing any business that competes with the current employer within a specific geographic location and for a particular period.
The signing of the non-compete agreement means accepting the terms. The terms include; not competing with the employer or engaging in any business that is similar to that of the current employer, whether as an employee, independent contractor, owner, part owner, investor, and any other kind of competition stated in the agreement (Clarkson & Miller, 2020). In this case, the non-compete agreement is valid as Cooks signed it.
Although the interpretation of non-compete agreements differs from one state to another, courts must examine common factors to determine the genuineness of non-compete Agreements. The courts have the mandate to determine whether the employer's main interest is to protect his interest in the non-compete agreement. It is also significant to understand the geographic scope of the restriction.
The court determines whether the non-compete agreement is fair or bars an employee from making a living. The non-compete agreement duration is also significant in determining how long the contract will be in force. The clauses in the agreement must be analyzed keenly to see whether it provides the employee with compensation or benefits for signing the non-compete agreement. The validity of non-compete clauses varies from one state to another because of the different legislation in place (Epstein, 2006).
In the case of the sandwich chain Jimmy Johns in New York, the court held that the company's non-compete agreement was invalid as it prevented employees from working in a similar sandwich industry for two years (Whitten, 2016). Thus, an employer must provide legitimate business reasons to justify the enforcement of a non-compete agreement. An employer cannot restrict an employee from utilizing the skills and abilities without good reasons. For example, an employer may block you from going to a competitor if you know its trade secrets that may be used to lure the customers away.
It is a way of the employee protecting himself and having a competitive advantage. The court may find a non-compete agreement enforceable if the employee has inside information that would harm the employer if the information is leaked to competitors. In this particular case, Cooks has no secret information about the company. Cooks was not told about any trade secrets. Hence it is unreasonable to ask her to stay unemployed for ten years and not engage with any companies that directly or indirectly competes with RRG.
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References
Clarkson, K. W., & Miller, R. L. (2020). Business Law: Text and cases. Cengage Learning.
Ella, V. J. (2018). Executive Employment Law: A Handbook for Minnesota Executives. Hillcrest Publishing Group.
Emanuel, S., & Rigos, J. J. (2007). Multistate Performance Test Review 2008-2009: Course 5329. Aspen Publishers Online.
Epstein, M. A. (2006). Epstein on intellectual property. Aspen Publishers Online.
Ford, K. E., Notestine, K. E., & Richard, N. HILL. 2000. Fundamentals of Employment Law.
Scott, R. W. (2008). Promoting legal and ethical awareness: a primer for health professionals and patients. Elsevier Health Sciences.
Whitten, S. (2016). Jimmy John's drops non-compete clauses following settlement. CNBC.
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