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We discussed in overview fashion the rationale and parameters of non-competition agreements in a recent blog post.
Specifically, we noted in our March 28 post entry that, “Judicial scrutiny of a non-compete is customarily close and exacting, and proceeds with due appreciation that both the involved business and worker have legitimate interests to protect.”
An initial point to note about non-compete agreements is that many employees never sign them. Such contracts are often centrally focused upon the protection of a company’s key proprietary data and information (for example, things like intellectual property and marketing/production processes and strategies), and not all workers are privy to such things.
Some are, though, of course, and are required to execute non-competition agreements as a prerequisite to employment.
How a non-compete might play out in an actual case is nicely illustrated in a recently unfolding business matter involving mega competitors Amazon and Target: A long-tenured and highly placed Amazon employee who is allegedly privy to strategic company information at the highest level recently commenced employment at Target, and his former employer effectively wants him muzzled for a lengthy period of time.
Eighteen months, to be exact, which is the “timeout” period specified in a relevant clause of a non-competition agreement that the executive signed with Amazon before working for that company. Amazon recently told a court that it will be materially harmed if the ex-worker is allowed to breach the contract.
Target, conversely (and unsurprisingly), states that the litigation Amazon has filed “is without merit” and that Target has taken all due precautions to protect its new employee’s ex-company from any data breach.
Many non-compete spats end up being settled outside court, with at-odds entities compromising on things like duration, scope of duties and so forth.
It remains to be seen how the Amazon/Target tiff will ultimately conclude.