What Is A Non-Compete Agreement?

When a person leaves their prior job, they may leave with knowledge or abilities that are unique or otherwise difficult to find in the marketplace. Depending on the industry, an employer may want the employee to sign a non-compete agreement, so that the employee cannot steal trade secrets or clients. Historically, non-competes have been “disfavored” in South Carolina. But sometimes, it is possible for an employer to succeed at enforcing one if it is narrowly tailored. If you are being pressured to sign one, it is crucial for you to know your options.

Must Be Narrowly Tailored

South Carolina’s courts have historically not been inclined to uphold non-compete agreements, because while employers have the right to protect their businesses, employees also have the right to earn a living. If a non-compete agreement is not narrowly tailored, it runs the risk of becoming what is known as a restraint of trade—an offense at common law. That said, very few non-compete agreements are actually narrowly tailored by the court’s definition. If you do wind up in a position where you must sign one, it may be unenforceable.

Generally, if a non-compete is reasonable and protects a “legitimate business interest” of the employer, the courts will allow it to stand. However, what exactly constitutes a “legitimate business interest” is often up for debate. Some things are obvious.—for example, protecting trade secrets is clearly within the employer’s legitimate business interests. However, other issues are often far less so.

Is It Enforceable?

Non-compete agreements are, as a rule, only enforceable if certain criteria are met. They include:

• The agreement must be supported by “valuable consideration” (that is, both parties must receive something of value from the transaction). Continued employment is not sufficient consideration, but a new offer of employment or a promotion may be, depending on the situation.
• Not “unduly harsh or oppressive” in terms of the restrictions it establishes, particularly in regards to time or geography. A person must still be able to earn a living—for example, the agreement may require that the employee not establish a business within a certain geographical area.
• Not containing anything that is problematic from a public policy standpoint. Public policy is a doctrine that essentially asks whether an idea would shock the conscience of the public. If so, it is said to be contrary to public policy, which is a big red flag for courts in terms of choosing to enforce the idea.

Keep in mind that in South Carolina, there is no severability provision for agreements like this. That means that if one part of a non-compete agreement is ruled to be unenforceable, the entire agreement will likely be voided.

Contact A South Carolina Employment Lawyer

Not every employer will seek to enforce a non-compete agreement when an employee leaves their job. However, if you are being asked to sign one, it’s crucial to speak to a South Carolina employment lawyer to ensure that you understand your options. Attorney A. Christopher Potts and the firm of Hitchcock & Potts are ready and willing to assist you. Contact our offices today to set up a consultation.