The traditional non-compete agreement provides that an employee will not go into competition with his or her employer for a certain period of time, or will move a certain distance away. Employers believe such agreements give them fair and necessary protection. They do not wish to compete with employees they have trained, and they don't want to lose customers they may have developed over time and at considerable expense.
Courts, on the other hand, dislike, non-compete agreements, believing that they interfere with an individual's ability to earn a living. Thus they will generally give such agreements close examination to determine whether the length of time or geographic area specified are "reasonable." In some jurisdictions, unreasonable provisions will be modified to what the court deems appropriate. Other jurisdictions, such as Wisconsin, will invalidate an entire non-compete agreement if any portion of it is unacceptable. Wisconsin will not re-write or "reform" a non-compete agreement to make it enforceable.
Courts are more sympathetic towards confidentiality agreements, however, as these do not create an immediate barrier to employment. Under a confidentiality agreement, Jo might quit work at Acme Inc. and go to work the next day across the street at Acme's biggest competitor, Mega-Amalgamated, without difficulty, provided Jo does not disclose to Mega any confidential information of Acme. The fact that Acme provided the training that made Jo the best in her field is immaterial. The knowledge and insight and experience she developed at Acme are hers to exploit, so long as she does not disclose any confidential information of Acme.
Acme, of course, might assert that everything Jo knows is confidential information. While that position would probably fail in court, Acme COULD assert it, if only to delay Jo's transition to Mega.
Acme would be better served, however, by a written agreement with Jo, carefully defining what information is "confidential," and which may not be disclosed to any third party, such as business plans, trade secrets, financial information, customer lists and the designs of new products or services. This level of specificity would allow Jo to exploit her talents and experience while giving Acme legally enforceable protection.
But we should not forget Mega-Amalgamated. They would be wise to add a non-disclosure provision to Jo's contract, stating that, as a condition of her employment, she is NOT to disclose any confidential information she has acquired from Acme or any other source.
Of course, Jo may retain general knowledge of Acme's plans and practices, but may not be able to specifically identify its source. Such general, retained information is known as "residual knowledge." We will address it in a future post.
