[TheGuyCPA]

I work for a firm which states in the signed offer letter I am prohibited from employing or seeking to employe with any direct or indirect competitor within 12 months of termination. How is this enforced and what are the penalties? I am unsure about a new opportunity that may or may not be a competitor.

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State of Illinois Licensed CPA as of September 2015

[Tncincy]

Most companies have a no compete clause to keep you from working with their company and their clients, leave their firm and start your own and solicit their clients. They also want to keep you from working for other companies and expose how their company operate. If the old company find out you have breech the contract, they will sue you. So be careful what you sign. To find out if a company is a competitor, just ask them. If yes explain your position, If no, proceed. Maybe have your own contract with ___________ is not and has not been affiliated in any way with xyz company within the last year……just an idea. keep yourself clear. at least for a year. Most companies have a no compete for longer than a year.

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[Missy]

The truth is that it is rarely enforced (unless the employee had a position with very technical knowledge or secrets–think a programmer at microsoft going to work for Apple)and unless you were management or a partner its doubtful they'd even think twice about where you went to work afterward, but you should always proceed as if it will be enforced just in case. In a lot of opportunities you will be asked if you signed a non compete agreement with your current employer and would likely not receive an offer if a company was a competitor.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

Yeah these are rarely enforced. There are laws to protect the employee – a public acctg firm that has a agreement like this not letting you join any other acctg firm in your area causes undue burden to you and won't be enforced IMO. That is much too broad. Now if you are a software engineer at a social media start up company and leave to another start up that IS your direct competitor when there were plenty of other options for you in your area that could be enforced. With that said it varies by state. I think most are more often on the employee side (especially CA).

[Anonymous]

Enforcement definitely varies from state-to-state, so Google “non-compete” with your state and see what you can find. Some states always side on the side of the employee (if anything is pursued), others always side on the side of the employer.

I signed a fairly restrictive (though not that bad!) non-compete when I got my first accounting job. I preferred not to risk breaking the rules, but was able to still get a job in accounting without breaking the rules (not easy, but was able to). Sounds like your non-compete essentially prohibits you from working in accounting (presuming you're at a public firm) or from working in your industry (say if you're in Oil & Gas, you'd have to switch to Construction or something like that). Generally, the more restrictive, the less likely the non-compete is to hold up in court.

[Author]

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