When is a noncompete agreement the right choice?

| Mar 19, 2018 | blog

Every successful company has their own way of doing things. It gives them an edge in a crowded marketplace. Protecting that edge is a big part of why noncompete agreements are made, but there a line where self-protection becomes an illegal handicap.

As we’ve written before, noncompete agreements have a definite benefit to employers, but there are also important qualifications to them. Crafting an agreement that is both legal and effective has to meet Colorado’s standards. The most important of the standards, however, is reasonableness. An unreasonable agreement is unenforceable

So what exactly is reasonable?

Colorado’s standard of reasonableness has three primary considerations. They are:

  • Geography: The geographical boundaries of the agreement have to make sense based on what the business does. So, if a business only serves Denver, then the employee can work in Fort Collins or Colorado Springs without violating the agreement.
  • Time: How long a noncompete lasts is dependent on a few factors and can be a case-by-case question. As an example, if the reason an employee signed a noncompetition agreement was to protect information, when that information is no longer valuable, there is no reason for that person to continue working under restrictions.
  • Scope: The central question with scope is this: what exactly is the employee barred from doing? Is it a certain specific activity within a profession? Or is it any activity pertaining to that profession? If a noncompete agreement is too broad, and could conceivably prevent a person from working in their field, then it is no longer reasonable.

What if I signed an unreasonable agreement?

Just because the agreement was signed, does not mean it will stand if it does not meet the standard of reasonableness. You have the right to work in the field you love, and your employer cannot take that away from you.

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