Playing with fire…Entrepreneurs: Are you running afoul of a non-compete?

Did you recently leave your job to strike out on your own? Have you started a business while you still have a full-time job? If you answered yes to either of these questions, it’s time to check your employment paperwork to make sure you are not violating a non-compete agreement.

A number of employers routinely have their employees sign “non-compete” agreements upon hire. The non-compete language may not be a separate agreement, but in a lot of cases is simply a section in an employment agreement. Generally, this type of provision is designed to keep employees from starting or entering into a trade or profession that competes with the employer’s. Typically, the non-compete covers the time period while the employee is employed and for a REASONABLE time period after.

While a number of entrepreneurs start businesses that have absolutely nothing to do with their full-time job (i.e. Sally works in sales at a cable company full-time, but recently started a cupcake business on the side), quite a few also concentrate their business in areas that can be considered competition with their current or recent employer (‘consultants’ in a number of different industries may run into this issue). And while some non-compete agreements wind up unenforceable and some employers use scare tactics against former or current employees without merit- there are some circumstances in which business owners are blatantly running afoul of a binding agreement that they signed. There are efforts across the country to abolish non-compete agreements. Unless and until that happens in Michigan, it’s an issue that needs not be taken lightly.

Most folks fly under the radar with this sort of thing. However, in that chance that your employer stumbles across your extra curricular efforts: will you be in violation of your commitment to them? If it’s significant activity that presents a real threat to your employer, you may find yourself in court defending an action to have your business operations halted or for other damages- depending on the language in the agreement. The last thing you want to happen is to be- from your standpoint- ‘blind-sided’ by an effort that will potentially negatively impact your business or your livelihood!

We are always asked: “Well, how will anybody know?” They may not, but do you want to take that chance? It’s always okay until it isn’t. Fish out your employment paperwork you signed and give us a call to schedule a consultation today. Let’s make sure you’re fully aware of your obligations under any documents you signed.

P: 248-395-3699 E:

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