Non-Compete Agreements

[RaRay]

Why did you sign it in the first place?

I didn't realize at the time the distance, favors in cut fees and llittle work I would be receiving. I was verbally told I would be in a great position by now. I am required to pay 1 years wages to get out of my contract. Not in the budget for me.

 

[RaRay]

Thanks for the advice. Sounds like the best plan.

I'm no lawyer...so you best consult with one.

It is only my suspicion, but I believe that a non-compete agreement that precludes you from working as an appraiser in your geographic area would not be upheld by the court system. But...spend the $$ and talk to a lawyer.

 

[Smokey Bear]

Best advice is to consult with a lawyer, although I see a few problems. First - are you an employee or an IC with this company? An IC, by right, can have other clients. Also, since they don't market in your area, it's hard to say you're competing, right? And if you're not going after their clients, you have better standing. Non-competes are often not enforceable when it comes to geography - it's your home working area. When it comes to clients, it's easier to enforce.

Be assured that if they find out, you will lose their business. However, due to the level of control they have over you, you should be designated as an employee. If you're not, that gives you a good bargaining chip over them if they want to sue to keep you from working. Check with the local bar assosication for a lawyer who is a member of an employment law bar and ask for a referral. You do have a right to work in your profession, especially if they're not providing you with full time work.

 

[RaRay]

Thank you for your advice. Yes, I am an employee for this appraisal firm. It clearly states I cannot work in my area until 2 years has expired from my departing. I certainley do not recieve full time work, however, I do receive some work from their "clients" that are major banks and are numerous appraiser's clients in my area. It would be a huge possibility if I went somewhere else that I would continue working for the same banks due to the new job's established relationship and my preapproved appraisal status. I'm on my way to see an attorney. All I really want to do is earn some extra money.

 

[AMJ]

I would check with your state. see if it's a right to work state.
Florida is a "right to work state" so those non compete agreements don't work here.
I agree with the Smokey the Bear, if he's not marketing in the area. I don't see any problem with you marketing yourself. Just don't go after his clients.

 

[Couch Potato]

I would check with your state. see if it's a right to work state.
Florida is a "right to work state" so those non compete agreements don't work here.
I agree with the Smokey the Bear, if he's not marketing in the area. I don't see any problem with you marketing yourself. Just don't go after his clients.

That is simply not true. A well written non-compete agreement is indeed enforceable in Florida (and every other state.) If you feel you must leave the company, by all means consult an attorney. Two years is not likely to be deemed an unreasonable length of time (although it is probably pushing the edge.) Given all that is going on right now with the industry, you probably ought to just sit tight until the end of the year if you can.

 

[Doug in NC]

I can understand the enforcement of a non-compete contract if you leave the firm and go out soliciting their business; however, it is not reasonable that you would be expected to cease working period in your area for two years. I doubt it would stand up in court, but that's why you will have to get an attorney to look at it for you.

 

[Pat Butler]

I had a friend who had to go to court to get out of a non-compete agreement. My wife also had to deal with this issue when she was laid off by an employer. Basically, certain aspects of the nc agreement were enforceable while other parts were not. They couldn't soliciate the same clients for example, but could otherwise continue to work in the same field.

One area brought up by the friend's employer was the issue of trade secrets. Even though my friend could work in the same field they still had to be absolutely certain that they did not disclose any trade secrets from their prior employer. That's a big issue. A lot of seemingly unimportant details about their relationship were deemed secret. It's easy to cross that line and be sued.

Irrespective of the legal aspects, what did you think you were agreeing to in the first place? There's no way I'd ever agree to a nc agreement unless I was being paid a huge amount of money that would basically make up for the expected loss in the future. In your case, it appears that the parties did not agree that you would earn a certain amount of money during the relationship. Bad deal from the start.

One strategy to discuss with an attorney would be the determination of how much money you would need to pay to get out of the agreement. For example, if you have to pay one year's worth of income then how is that determined? If you are barely getting any business right now then could that the last few months of income be used to extrapolate into a yearly amount? Considering the dramatic downturn in business it might be deemed reasonable to use a shorter time period to determine the yearly amount.

 

[Dan/Fla]

I would check with your state. see if it's a right to work state.
Florida is a "right to work state" so those non compete agreements don't work here.
I agree with the Smokey the Bear, if he's not marketing in the area. I don't see any problem with you marketing yourself. Just don't go after his clients.

Unless the law has changed in past 15+ years the right to work law in Florida has nothing to do with Non-Compete contracts. I used to be a state sales manager of a company that used and enforced Non Compete agreements here in Florida and the company won every case I know of; back then. Yes at that time Florida was a right to work state. Though true I am not a lawyer nor did I stay at a Hoilday Inn express last night but I think being a right to work state has to do with Unions and closed shops, which requires all workers to be Union. But I have been wrong before. I agree with the others whom stated get a Lawyer to review the agreements and see what you options are.

 

[Metamorphic]

Are they enforceable?
Generally speaking, yes. Courts have traditionally frowned upon restrictions placed by employers on their employees' right to find and make a living. However, courts will enforce non-competition agreements if:

• the employer proves that it has a legitimate business interest to protect by restricting its employees' right to compete against it;

• the restriction on the employee's right to compete is no greater than that necessary to protect the employer's business interest; and

• the covenant not to compete is supported by consideration, meaning that the employee received something in exchange for it.

What if I cannot work anywhere else?
If the employer's restriction against competition prevents you from working anywhere for anyone, it is probably too broad. Few employers will be able to convince a court that their business interest is important enough to prevent an employee from working for anyone else.

http://www.myemploymentlawyer.com/non-compete-covenant-FAQs.htm#What are some

What I think could be the big problem with your employer's case is that they're not keeping you employed. It almost seems like you could argue that they dont have a sufficient business interest to protect.

I also found this.

A non-compete agreement will only be enforced in Ohio against a former employee if the agreement meets all three prongs of the test laid out by the Ohio Supreme Court in the case Raimonde v. Van Vlerah. Raimonde requires that for a non-compete clause to be enforceable, an employer must show reasonableness, in that (1) it has a legitimate business interest sufficient to justify enforcement of the non-compete clause; (2) that the clause does not cause the former employee undue hardship; and (3) that enforcement of the clause will not be harmful to the public.

http://www.invention-protection.com..._Agreements_Face_Difficult_Tests_in_Ohio.html

It sounds like you can show the agreement unenforceable under 2. Having to move or undertake a financially devastating commute distance, plus costs of getting competent in a new region sounds like hardship to me.

But the big question is what is the legitimate business interest under prong 1 that your employer has. There's no secret appraisal ingredient or technique that you've been given access to, there's no unique training involved. The only vaguely valuable business interest is the client list. Even then, if you're doing mostly AMC work, its not like the client list is a big secret. Even if you did successfully develop a relationship with that AMC its not like it would be at the expense of the former companies relationship with them. They might loose individual appraisals but they wouldn't loose the client, and you wouldn't have any competitive advantage with those AMC's as a result of current employment.

The most important factor though, that makes the agreement unenforceable is that anybody off the street with a recently printed appraisers license is as well equipped to compete with your employer as you are. Your having worked there has not given you any competitive advantage against them. Ok, maybe there's a few plums on the client list that you could out and out steal, but if that's a case a simple and precise agreement not to work with those clients would suffice. Its not necessary to make you make you non-viable in the market to achieve protection of the employers interest.