Non-compete agreements are becoming increasingly common. Employers want to be sure that they are not investing their time and money in their staff, only to have them leave and apply their knowledge and training to a competitor’s benefit. But despite their popularity, non-compete agreements are also controversial. Some say that they are overly restrictive: depending upon how they are written they can effectively prevent employees from being able to seek meaningful employment after their departure. In response to these concerns, courts asked to resolve non-compete agreement disputes take a close look at the terms that the agreements contain, and this is as true of those signed by new employees as for those asked to sign long after they’ve begun working.

A non-compete agreement is not valid unless the employee is provided with some form of compensation in exchange for their concurrence. In the case of a new employee, that compensation is viewed as the job itself, but things become more complicated when an existing employee is asked to sign a non-compete. Employers often have good reasons for wanting to discourage the employee from leaving and going to another employer: the employee may have become more valuable as a result of their success or their knowledge of competitive secrets. But they cannot simply insist that an employee sign the agreement without providing them with something of value.

Every court will take a different view of what constitutes appropriate compensation, but in most cases, continued employment is not enough. Courts will expect employees to be given some additional consideration, which might consist of a promotion, a salary increase or more benefits, or even additional training or access to company secrets. Some companies are straightforward in their approach, offering employees bonus compensation in exchange for signing the agreement.

One of the concerns that employees who are hesitant about signing non-compete agreements have expressed is that a company might ask them to sign an agreement immediately before firing them or laying them off, effectively keeping them from seeking another job. Courts will consider the amount of time between the signing of the agreement and the end of employment when making their decision about whether the non-compete is enforceable. At all times, the underlying question is whether the agreement’s terms are reasonable.