Has the Pandemic Changed Non-Compete Agreements?

The COVID-19 health pandemic changed a lot of things in the workplace. Some of these changes were temporary, while others continue now and are expected to continue for the foreseeable future. Do these changes apply to non-compete agreements that affect employees?

What is a Non-Compete Agreement?

Many employers require employees to sign non-compete agreements. Most of the time these agreements are part of the employee orientation process. Sometimes, employees don’t need to sign a non-compete agreement until later with their employer, after they’ve assumed more responsibility in their jobs.

A non-compete agreement is a contract that prohibits you from working for a competitor of your current employer. Some non-compete agreements are too restrictive and wouldn’t hold up in court. Employers use them as a deterrent to prevent employees from moving from one company to another. Companies that have taken the time to design legally sound non-compete agreements can take legal action against you if you violate the agreement.

To learn more about non-compete agreements in general, check out this information.

In the past, as long as a non-compete agreement was reasonable, it was likely enforceable.

Has COVID changed this?

The pandemic changed a lot for a lot of people. In some cases, it affected the enforcement of non-competes.

When determining if a non-compete is legal, most courts consider whether or not fulfilling it is impossible or unpractical due to unexpected circumstances. Chances are you nor your employer considered how the outbreak of a deadly virus would affect your ability to continue working for your employer. If your agreement does not address this issue, the ambiguity could excuse you from performance.

That’s legal language for saying the non-compete agreement is not enforceable due to the unexpected situation in which we’ve found ourselves because of the pandemic.

How Does Job Loss Affect Non-Compete Agreements?

The pandemic led to massive job loss and the closure of many businesses. People who had no reason to expect job loss suddenly faced unemployment in 2020. Companies with no intention of laying off employees or shutting their doors faced difficult challenges due to the pandemic.

As a result, even employees who previously signed non-compete agreements could be eligible to work anywhere without restriction. Requiring them to honor their non-compete agreement seems under pandemic circumstances.

Sometimes the situation isn’t this cut-and-dry. Some layoffs were temporary due to COVID and people had to look for other jobs. In other cases, it was the new job that raises questions. Should you sign a non-compete with an employer who recently hired you amidst the pandemic?

Additionally, telecommuting has caused a lot of confusion regarding non-competes. Do geographic restrictions apply when you’re working remotely?

As we emerge from COVID, many people have questions regarding non-compete agreements and employment in general. All of these concerns are valid and require a careful examination of employment law at the state and federal levels.

If you have questions about your employer’s non-compete arrangement or you have any concerns about issues that have arisen in the workplace as a result of COVID-19, we can help. Contact Borrelli & Associates, P.L.L.C. to schedule a free consultation.