There is something about the start of a new year that gets our phones ringing with questions about non-compete clauses. The ball-dropping and new years champagne gets a lot of people thinking about changes at work. Whether you are an employer or an employee, thinking about ending a work relationship to move on to something new inspires a dusting off of employment contracts to see what is there. Here are some of the most common myths about non-competition clauses.
Myth 1 : Non-competes are never legally enforceable
This is common myth. Non-competition clauses can be enforced by courts in BC. It is true that employers face an uphill battle in getting a judge to agree to enforce a non-compete, but it can and does happen. If you are wondering whether your non-compete will stick, ask an employment lawyer. Enforceability of a non-compete depends on the specifics of the wording of the clause itself and the overall employment contract. Some key considerations are whether the clause is clearly worded, and whether it is limited in time, geography and scope of what is covered.
Myth 2 : Non-competes mean the employee can’t work for any competitor
We find that many employers and employees do not read the actual words of their contracts, and instead assume what is covered. If a non-competition clause is enforced by a judge, it will only be applied to prevent the employee from the specific activities listed. If the employer has missed something from the clause, or there is a “loop-hole,” that is generally fair game. Wondering what an employee can or can’t do post-termination? Read the clause.
Myth 3 : Non-competes are the only way to stop an employee from competing post-termination
Non-competition clauses are only one way to stop an employee from competing. Many contracts include non-solicitation (aka non-solicit) clauses, which are meant to prevent the employee from contacting clients. Non-solicitation clauses are still an uphill battle to enforce, but slightly easier than a non-competition clauses. This is because non-solicits don’t dictate where an employee can work, just what business they can seek out. Even if there is no contract, obligations to respect confidential information, and fiduciary duties (in the case of key employees) last beyond the end of employment and can limit competition.
Wondering whether your non-compete is enforceable? An employment lawyer will be able to tell you. At our firm, in a flat-fee consultation, we can review your contract, advise you on legal enforceability, and work with you to make a plan of how to deal with it going forward.
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