Non-Compete Agreement, Essay Example

The software designer will take all reasonable means to keep the security of the company and refrain from disclosing the company’s trade secrets, customer information or any trade secrets relating to the company or the company’s software applications. The software engineer agrees to abide by this non-compete or confidentiality agreement during the course of employment and after the course of employment is terminated. Further the software engineer agrees not to compete with this company for a period of five years or any other company within a 50 mile radius for five years with regard to the application developed for this company. This is a specialized program and should be treated as a copyright for such purposes. Any violation of this confidentiality agreement will serve as grounds for a lawsuit without arbitration holding the software engineer and his/her employer responsible in a court of law. The confidentiality agreement shall stay in force for five years from the signing of this contact unless expressly revoked by the petitioning party.

Under contract law an employee or third party contractor is bound under contract law not to pursue competition against an employee he/she has worked for including under the Consideration Doctrine. The purpose of the doctrine is to prevent a person from opening their own business or going to work for another company, rather a competitor of divulging or abusing privileged information. For a court of law to abide by a non-compete agreement the clause of geographical proximity must be one of ‘reasonable nature’. As distinguished in Paramount Termite Control Co. v Rector (1989) through a preponderance of evidence a plaintiff must establish that it would be a hindrance to the company as well as the clause would not prevent the employee from gaining employment in order to succeed with the non-compete clause. The factor of ‘public policy’ for the best interests of the public is also weighed into factor. California does not particularly like non-compete clauses but will enforce them in such instances as the Full Faith and Credit Clause.

Courts in Illinois were not able to give rise to the Legitimate Business Interest Test when they ruled to enforce the non-compete clause to mandate an employee not work for a competitor within a 50 mile radius. The law was standing for over thirty years prior to the Sunbelt Rentals ruling. Lawyers are concerned that this ruling, at the appellate level will set precedence allowing for companies to walk over employees leaving with little to no room to work for other companies in the same capacity or to open their own business. Non-compete agreements are existent in many states but many states such as California and Illinois are attempting to set precedent to give more freedom to the employee. Whether this is a positive situation can be argued on the basis that a company’s secrets cannot be protected, however who gives a company the right to restrict a person’s ability to use the knowledge they have gained from a company for years after leaving that company?

References

Full Faith and Credit Clause

Paramount Termite Control and Rector (1989)

Consideration Doctrine

Sunbelt Rentals v Neil Elhers and Midwest Aerials and Equipment (2009)

Legitimate Business Interest Test