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More employers are using non-compete agreements

It is not unusual for Twin Cities employers to use non-compete agreements to prevent their employees from taking business secrets and contacts to competitors. Non-compete clauses are often found in employment contracts in the technology sector as well as in those for sales jobs and senior corporate positions in various industries.

While it may seem to make sense that a business needs to restrict the movement of employees in order to protect its interests in certain cases, a recent rise in the use of non-compete contracts suggests some employers may be overplaying this card.

The New York Times recently reported that a summer camp forced teenage counselors to agree not to work for competing camps. And, at least one camp counselor was not even aware that the employment contract she signed contained the non-compete clause.

The report noted that yoga instructors, event planners, entry-level employees and interns are also among employees who are being banned from working for competitors.

Because of the rise in the use of non-compete clauses, at least one state, Massachusetts, is considering almost completely banning them. California already bans non-competes in almost all circumstances.

Those in favor of non-competes argue that they encourage employers to invest in employees as well as prevent the theft of trade secrets and client lists. Those who support non-compete bans counter that they hinder innovation and thus economic growth.

Here in Minnesota, non-compete agreements are only allowed by law when they are restricted in certain ways in terms of industry, timeline and geography. Employers who use these contracts to protect a competitive advantage should seek legal counsel to ensure the agreements are properly executed. By the same token, workers who are asked to sign non-competes, or who are being subjected to enforcement efforts, may want to talk to an employment law attorney to make sure they understand their rights and legal options.

Source: The New York Times, "Noncompete Clauses Increasingly Pop Up in Array of Jobs," Steven Greenhouse, June 8, 2014

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