I'm about to sign on to a NYC-based startup on Monday, and this part of the non-compete agreement they sent me raises a flag:
Covenant Not to Compete: The Employee agrees that for a period of twenty-four (24) months following termination
of the Employee’s employment with the Company for any reason, the Employee will not, directly or indirectly, own,
manage, control or participate in the ownership, management or control of, or be employed or engaged by or
otherwise affiliated or associated as a consultant, independent contractor or otherwise with any other corporation,
partnership, proprietorship, firm, association, or other business entity that is engaged *in any manner in the
Business of the Company in any market (including the Internet market)* located in the United States as well as
outside the United States in which the Company markets any of its products or services.
Am I right interpreting this as saying that I can't work for internet related companies if I leave the company? Is this unenforceable boilerplate legalese that I shouldn't worry about, or something to discuss?
Another provision which bothers me is one that says I won't (for 24 months) "Employ, assist in employing, recruit or otherwise associate in business with any present, former or future employee". Is this something that's worth challenging?
I don't fully understand some of the other concepts in the agreement - things like definitions of "Reasonableness" and "Toll Period", which seem to be based on particular cases or laws - what is a good place to read up on this?
Non-competes basically contain three elements:
1. Scope - what you can work on. This non-compete says anything that NYC company does.
2. Duration - this one says 24 months
3. Location - this one says anywhere.
Regarding #1, the court will likely hold that this is reasonable. A non-compete can keep you from working on what you know.
Regarding #2, 24 months is on the long side of acceptable duration. It isn't completely unreasonable, but it is long.
Regarding #3, this is a tough one. As a law student I have not dealt with internet non-competes. It makes sense to limit competition in a geographic area. For example, an agreement where a barber cannot open a competing barbershop next door is considered reasonable by the courts. But location doesn't apply easily to the internet. Where the business is matters less.
To research more, try to go to a law library. Go to the 'Hornbook' series. They are summaries of law across the United States. They are not actually law. You will need to see what rule actually applies to your jurisdiction. There are many Hornbooks (ones on contracts, torts, property, etc). You will have to look at the table of contents and index to see which one you need.
Second, in the law library, take a look at American Jurisprudence. It is similar to the hornbook. You will most likely need a law librarian's help with that one.
You can send me an email with more questions on reasonableness and toll if you want. My email is in my profile. I can answer questions much better if I can read the whole agreement and I know the background on the business.