Have you ever been so excited to receive a job offer that you signed the employment contract without doing much more than skimming it (if that)? It’s a common story, and there’s a reason the employment contract tends to be the last step in the process – sometimes even coming after the employee has already started working their new job.
If you’ve ever found yourself in the situation described above and you weren’t working in a state like California (which bans non-compete agreements), then the employment contract you signed probably included a clause forbidding you from going to work for a competitor. How much your contract prohibited any chances of employment you had in the future would have depended on the company, but many employers (especially large corporations) have been getting increasingly aggressive with their non-compete agreements in recent years and legislators all over the country have been retaliating.
While California is still one of only a few states to have an outright ban on all non-compete agreements, more and more states have been protecting workers by putting restrictions on what companies can include in their non-compete agreements. Washington recently joined the ranks of the states with severe restrictions on non-compete agreements.
To begin with, Washington state law now requires employers to provide notice of the terms of their non-compete agreements before the prospective employee starts working there – no later than at the time they make an offer of employment. That way, if the prospective employee is getting offers from other companies, they have a chance to go with another company without a non-compete agreement or with a less severe non-compete agreement. If an employer wants to make changes to their non-compete agreements with their current workers, they need to make them aware of those changes on their own and without hiding them in an entirely new employment contract.
While non-compete agreements were originally designed to prevent high-level employees from taking trade secrets and/or valuable client relationships with them to a competitor across the street, companies have recently been making more and more workers sign non-compete agreements, even workers earning minimum wage and performing unskilled jobs. The new Washington state law is putting a stop to that by forbidding companies from maintaining non-compete agreements with employees earning less than $100,000 per year or independent contractors earning less than $250,000 per year. Those amounts will be adjusted each year to account for inflation.
Another common problem with non-compete agreements is that employers have been extending the time their workers can’t work for a competitor after their employment is terminated (for any reason). Many laws have been passed limiting non-compete agreements from being effective for more than six months or a year after termination since that’s the lifespan of most trade secrets. Washington state has just limited non-compete agreements in the state to 18 months after termination, but it has also gone a step further by requiring employers to continue to pay workers their base salary (minus any income they receive from other employment) for the duration of the non-compete agreement being effective. If they refuse, then the non-compete agreement is deemed unenforceable.
The new law makes for an exciting development for people working in Washington state and for business attorneys all over the country. We’ll be keeping an eye on these developments in Washington, as well as other places across the country enacting similar laws.
If are a business trying to sue to enforce a restrictive covenant or an employee whose employer is requesting that you sign such an agreement, you consult experienced Chicago employment, trade-secret and non compete agreement lawyer. Our Elgin and Aurora non-compete agreement and employment attorneys have more than three decades of experience representing individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Lubin Austermuehle is also available to help prepare new agreements, update existing agreements and employee handbooks, and advise on potential enforcement actions. Our Chicago business dispute and commercial litigation lawyers have defended high-level executives and represented classes of hourly workers in wage violation cases. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.
Our Chicago business litigation lawyers with offices near Elgin, Oak Brook and Evanston have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We represent both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Based near Naperville and downtown Chicago, our non-compete clause lawyers take cases from LaGrange, Willowbrook and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact us online or call toll-free at 630-333-0333 or locally at (630) 333-0333 today.