Enforceability of Restrictions in Employment Agreements

When a company places restrictions on employees through contracts and agreements, it is important for management or the owner to enforce the contractual obligations once the individual signs the document. However, for a breach, it is possible that the worker may find the contract thrown out by the judge depending on the clauses or limitations placed on workers.

When a company creates a contract for use to limit what an employee may accomplish during or after employment, this places restrictions that may or may not remain enforceable through a court of law. The clauses and specific details will often determine if the contractual limitations will remain effective during a court case if there is a breach. However, if the employee suffers undue harm or hardship through business, the judge may throw the contract out entirely. Additionally, if the limitations cause some form of injury due to economic circumstances, the judge may still remove the enforceability of the agreement.

Employment Agreements Explained

When the employer has a worker sign an employee agreement, he or she initiates a contractual agreement between the parties. These agreements establish a legal relationship based on current, and sometimes future, employment within the company. Some contracts have the element of an offer, an acceptance or consideration. Others may restrict the party in what he or she may accomplish or engage in such as exposing a trade secret or acquiring clients from the company for a future business endeavor. Knowing if the contractual restriction is enforceable is important in keeping employees in line. It is important for the company to hire a lawyer to analyze the document for flaws.

The Contract’s Enforceability

Employers are often wary of disclosing trade secrets or lists of clients that the employees will work with due to possible risks of losing business or the loss of revenue. For these situations, the company generally makes use of a contract that limits what the worker is able to say, explain or accomplish during his or her time at the company or for up to so many months or years after employment ends. Some contracts such as the non-compete reflect up to a decade without any ability to go into the same or a similar business against the company. These could only stop the employees from transferring clients over to the new business, but some contracts restrict any business attempts for up to years after they are no longer at the company.

Other contracts such as the nondisclosure agreement prevent employees from telling anyone about methods, processes and details of products. This could relate to trade secrets or a business edge the company uses to increase revenue. However, enforceability relies on two primary concerns. If the company is unable to ensure the wording is exact and clear, the judge may throw the contract out in the event of a breach. Another major problem involves placing restrictions on the business market in the local area to the point of unfair practices. This would invalidate the contract and let an employee accomplish what the agreement specifies he or she should refrain from after employment.

Pursuing a Case by the Company

It is imperative that the contract have enforceable clauses. Because of this, the owner or management of the company often employs a business lawyer to analyze contracts specifically for faults and unclear statements. A standard form is generally used after the legal team assesses the original document. Then, if any changes become necessary, the lawyer will review the matter again. If an employee or former employee breaches the conditions of the contract, the company may need to take the matter to the courts for a cease and desist or another remedy depending on the circumstances of the breach and actions of the individual.

Pursuing a claim generally requires the services of the lawyer that analyzed the contract with the limitations and restrictions. What he or she deems appropriate to the situation may not hold true in court based on the decisions of the judge. However, with a convincing argument, the judge may determine the clauses and contract are enforceable. This would ensure the limits placed on the employee hold true. 

The Legal Team in Enforceable Agreement Restrictions

Some companies have several lawyers to review and ensure contracts have valid restrictions. Through hiring these professionals, the case may proceed to the courtroom before a judge to determine enforceability. During a breach of the conditions, it is possible to acquire a cease and desist ruling from the judge.