Should I Sign a Non-Compete Agreement?

Whether or not to sign a on-compete agreement is one of the most common dilemmas to arise in professional life. A non-compete agreement requires employees to sign a document promising they will not work for any competitor of their employee. Details of non-compete agreements vary from company to company, which is why it is important to carefully review any agreement document before signing. The variances also make it difficult to give an across the board answer whether or not you should sign an agreement.

First, make sure non-compete agreements are legal in your state. If you sign one and agreements are not legal in your state, it will not hold up in court. You should be aware that under Colorado law, many non-compete agreements may be unenforceable. Colorado has a strict statute that invalidates non-compete agreements except under certain defined circumstances. The law of non-competes in Colorado is unique and it is important that you consult with an attorney experienced in this area before you sign an agreement.

Limitations of Non-Compete Agreements

Even if a non-compete agreement governed by Colorado law is generally enforceable under the strict statute; a court will still look at the specific terms of the agreement to determine whether it is reasonable. Common reasons an agreement might be considered unreasonable by a court include the length of time it lasts, the geographical area is covers, or the people to whom it applies.

If you are asked to sign a non-compete agreement as part of your employment, you should have an attorney review the document and consider the following:

• How broad is it? Does it only cover specific competitors or would you be limited from working anywhere in the same capacity as you have in your current position? Consider what happens if you need to relocate. Does the agreement cover only the immediate geographic area or are you making a nationwide commitment?
• How long does it last? Most non-compete agreements are for no more than two years. A longer agreement might not hold up in court, but if it were, it would severely limits your ability to ever find work in a particular industry.
• Is signing the agreement worth it? The employer must compensate employees with an abundance of opportunity and a substantial wages and benefits package to make the commitment worth it. Non-compete agreements are contracts and limit an employee’s opportunity to leave a company unless he or she decides to change careers. Make sure any employer asking you to sign over your professional future is worth the commitment.
• Is the agreement unenforceable under Colorado’s statute prohibiting many types of non-compete agreement? This can be a complicated question that depends on the nature of your employment relationship with the company, whether you are a manager or executive, whether you are in certain professions, or selling a business. Consulting with an attorney experienced in Colorado law is critical to determine these questions.

One final thought: you can use a non-compete agreement as a bargaining tool. If you are negotiating salary and benefits with a potential employer or a non-compete agreement is part of a promotion with your current employer, ask for better opportunities within the company since you may be unable to go elsewhere once the agreement is signed.

Having an attorney review a non-compete agreement is a good idea. He or she will understand the law and how it applies to the document you have been asked to sign. If you have questions about non-compete agreements, contact the experienced colorado employment legal team at Miller and Steiert, P.C.