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You Signed a Confidentiality and Non-Compete Agreement – Now What?

So, what are your employment options after you sign a confidentiality and non-compete agreement?

So What Are Your Employment Options After You Sign a Confidentiality and Non-Compete Agreement

This question comes up very often and‚ in particular‚ for sales representatives who have access to national accounts‚ pricing information and relationships with purchasers. That is‚ you accept a position or you continue in your position as a sales representative and you sell to national and regional accounts. The market you are in is probable competitive and many times you compete on price and the ability to offer a more complete product line. This is especially so when dealing with national retailers who may be your customers.

The "typical" scenario that creates many questions relates to the "at-will" sales representative. That is‚ an individual who:

  • Is a high level sales representative but one that does not have an employment contract where you are guaranteed employment for a set period of time (Note: even if you have a written contract‚ read it to make sure your employment is guaranteed – it probably is not)
  • Has access to customers who her or she sells to and has information about pricing and production sources; and
  • Signed a confidentiality and non-compete agreement wither at the time of accepting employment or‚ after the fact‚ some months and possibly years later.

If this is a situation that you are presented with and you are considering employment with a competitor or perceived competitor then you have questions about whether or not the confidentiality and non-compete agreements are enforceable. You are also concerned that whether the agreement is enforceable or not your current employer will just sue you anyway.

Is there an answer?

There is but‚ unfortunately‚ it is "fact specific" and not subject to any generalized statements. Having said that, you should know that agreements are highly scrutinized by courts and‚ many times‚ found to be unenforceable. Factors to consider include:

  • Whether or not the customer information and pricing information is truly "confidential". What I am getting at is whether or not your competitors already have this information‚ i.e.‚ your competitors know who you sell to and the prices charged and more likely than not you know who they sell to and the pricing. Remember for the agreement to be enforceable the information must be confidential and not known within the industry.
  • Confidentiality and Non-Compete agreements in "at-will" employment settings are less enforceable than when contained in contract based employment agreements. They are even less enforceable in at-will employment settings where the confidentiality and non-disclosure agreement was signed many months after the employment start date.