Are Non-Compete Clauses Fair?

Are Non-Compete Clauses Fair?

An increasing number of employment contracts are including a non-compete clause, and that has sparked a legitimate debate. Most non-compete clauses say that a person cannot work for a company in a similar industry for one to two years after leaving their employment.

Is that fair? Let’s look at both sides of the argument.

A Non-Compete Clause Preserves A Company’s Investment
When a company hires a new employee, it’s also investing money in training that employee and providing that employee with the expertise they need to do their job. The resulting intellectual property becomes critical in helping the company to compete in its industry. In this way, a non-compete clause makes sense because it helps to protect the company’s investment.

Non-Compete Clauses Can Cause Employment Issues
In a society where people are supposed to be free to work wherever they want, non-compete clauses restrict employment options and can make life unnecessarily difficult for workers. It is often unrealistic for a company to expect a departing employee to find gainful employment in a brand new industry so, in this way, non-compete clauses are unfair and restrict a person’s ability to make a living.

The Company Owns The Property And Not The Employee
Trademark and patent laws are created to allow companies to protect their intellectual property. In some ways, it could be argued that companies are using non-compete clauses as inexpensive patents or trademarks. The company owns the property, but not the employee that created that property. If the issue is the intellectual property, then there are ways to protect that property without restricting an employee’s ability to work.

More Unrealistic Than Unfair
So, are non-compete clauses unfair? The real answer is that non-compete clauses are more unrealistic than unfair. A company that takes the necessary steps to protect its intellectual property should not fear employee turnover. It is simply unrealistic to allow a company to dictate the employment options of an employee a year or more after that employee has left the company.

Whether you call non-compete clauses unfair or unrealistic, the truth is that they should be unnecessary to a properly-run company.

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