Recent efforts to bar noncompetes in Massachusetts have triggered a series of general interest articles about noncompetes.
Earlier this month, the New York Times ran a story about how “Noncompete Clauses Increasingly Pop Up in Array of Jobs” (http://www.nytimes.com/2014/06/09/business/noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?_r=0). That article suggested that more employees were being asked to sign noncompetes and that noncompetes were being used in unexpected fields. The article began, for example, with an account of a camp counselor who was asked to sign a noncompete and included a story about a hairstylist who was unemployed for a year because he lost a court battle with his former employer over a noncompete.
The New York Times followed up with a a discussion, When Companies Close Doors to the Future, in which four lawyers (but no economists) voiced their opinions about whether businessess should be allowed to compel employees to sign noncompetes: http://www.nytimes.com/roomfordebate/2014/06/10/should-companies-be-allowed-to-make-workers-sign-noncompete-agreements. Not to be left out, the New York Times editorial page ran a piece which assumed the worst about noncompetes and condemned the expanded use of noncompetes: Clauses That Hurt Workers (http://www.nytimes.com/2014/06/11/opinion/clauses-that-hurt-workers.html?partner=rssnyt&emc=rss&_r=0).
An avalanche of articles have been published in the newspapers in Boston about the legislative efforts to bar noncompetes in Massachusetts. Many of the commentators oppose the use of noncompetes because of the burden placed on employees. Here’s an example: http://www.bostonglobe.com/business/2014/04/19/time-get-rid-noncompete-agreements/VcIjVuaAcOopLZOvwqSMtK/story.html
Colorado readers, or at those with agreements governed by Colorado law, should be skeptical of these articles. Every state has its own rules about noncompetes. These rules vary widely. States like California and North Dakota generally bar the enforcement of noncompetes in employment agreements and states like Florida generally enforce noncompetes. (Different rules apply in connection with the sale of a business or dissolution of a partnership.) The articles in the New York Times all appear to report stories from states on the East Coast which favor the enforcement of noncompetes. In Colorado, noncompetes are disfavored and enforced only if the noncompete falls within one of the exceptions in the noncompete statute. Absent extraordinary circumstances, for example, it’s hard to see how a noncompete could be enforced against a camp counselor if Colorado law were to be applied.
It is true that some Colorado employers have pushed to expand the number of employees who are asked to sign noncompetes. In addition, some Colorado employers have pushed noncompetes in different fields or with non-mangerial employees. Nonetheless, the standard by which noncompetes are judged in Colorado is different than those reported in these articles. Employers have a higher burden and, if they have enough information and a plan, many employees are successful in avoiding the limitations imposed by noncompetes.