Has Your Community Ever Encountered a Non-Compete Clause?
A client recently contacted me with regard to a personnel matter. The community had fallen in love with a particular security guard and while the contract with the security company was slated for termination, the board wanted to hire this guard personally to continue on with them.
Unfortunately for this community, the guard had signed a non-compete agreement with his current employer and, as a consequence, would not be able to accept the association’s offer of employment for at least two years.
Has this ever happened to your community?
Non-compete agreements became even more common during the Great Recession when signing an agreement restricting future employment opportunities seemed like a small price to pay for a job. These types of restrictive provisions can be found in all types of industries including those which service community associations, particularly management and security services. With the economy on the upswing, more and more employees are starting to challenge the non-compete agreements they previously signed without much concern.
While most employers can insist on a non-compete agreement from its employees, those same employers must have a legitimate business reason to enforce same. Some legitimate reasons include the employee possessing the company’s trade secrets or other proprietary information which cannot be accessed through public means. Trying to protect a company’s investment in an employee via specialized training as well as protecting the relationship which the company has created with a client base, existing and potential, is a legitimate reason to enforce a non-compete. Trying to prevent competition is not.
Most non-compete agreements restrict an employee’s ability to obtain similar employment within a certain geographic area and within a certain period of time after leaving the company’s employ. Lest you fear you will lose your favorite attorney if he or she leaves a particular firm, non-compete agreements have been stricken down by the Florida Bar and other state bar associations as they pertain to attorneys. However, the same is not true for other industries where each agreement will be judged on its own merits. Communities looking to hire personnel should inquire about the existence of any non-compete agreements those candidates may have previously signed. Hiring without having that knowledge can present costly problems for the association including an interruption in services if the employee must be fired and rehired at a future date.
The moral of the story for associations: look before you leap. The moral of the story for employees: understand the long-term consequences a non-compete agreement can present before you sign on the dotted line!