Non-Competition Clause

[solarpro]

Jurisdiction

New Mexico

I work as a sales-person for an employee-owned solar installation business in Santa Fe New Mexico.

several months ago, I bought a minimum number of stocks in the business to become an employee owner. In doing so, I signed a Non-Competition and Non-Solicitation Clause. The Clause prohibits my employment with a competitor within 60 miles, for 1 year.

Recently, there have been several changes to the managerial and executive teams, and the outlook for the company is uncertain.

A competing company has offered me a sales position within the same geographical area, and I would like to accept, however I am concerned about the Non-Competition Clause. Is it enforceable, and would the company be likely to enforce it?

 

[army judge]

Is it enforceable, and would the company be likely to enforce it?

To be sure about the agreements you signed, take them to a lawyer and request the lawyer provide you with a written legal opinion as to whether: 1) the agreements are enforceable, 2) legal in New Mexico today [November 2016], 3) the advisability of ignoring the agreements, presuming they are legal and enforceable.

Yes, that will cost you money.
If money is an issue, be sure to inquire as to the cost for the lawyer providing you with his or her WRITTEN legal opinion.

Why would you want the lawyer's legal opinion to be in writing?

The lawyer's written opinion can be invaluable if you are ultimately sued by yoru current employer.

The lawyer's written opinion can also be used as an affirmative defense IF you are sued.

No one, not even a licensed New Mexico lawyer, or a licensed lawyer in one of the other 49 US states can know if an entity will sue you.

Forget that question, and seek a written legal opinion as to whether the documents you signed are legal on their face, or legal as the laws of NM require.

 

[adjusterjack]

Is it enforceable

Even in states that disfavor non-competes, they are enforceable if they are reasonable and protect the company's interests.

A geographical area within an hour or so drive of the company and a year's duration is a bare minimum and could easily be enforceable.

More so since your relationship to the company is that of an owner, not just an employee.

I agree that having your agreement reviewed by an attorney is a good idea.

Meantime, read the following comprehensive discussion of NM case law on non-competes:

http://www.peacocklaw.com/wp-content/uploads/2013/10/cov-not-compete-2000.pdf

I'm not endorsing any particular attorney but the writer does seem to be an expert on non-competes if you want to start with that firm.

 

[Michael Wechsler]

The larger issue with these non-compete agreements is with your potential new employer. Have you discussed the non-complete agreement with them?

Many times they don't want to even broach the subject of employment once they discover that an employee has a potentially enforceable non-compete clause. In general they have been held to be valid if no more than one year and within a reasonable geographic limitation and that the employee is of the kind where such restriction is reasonable. Sixty miles in distance is likely not going to be an obvious enforceability issue that might invalidate the non-compete agreement. And since you're also now an employee shareholder, it may take you outside the realm of a fringe employee, e.g. the employee who cleans the offices and holds no shares of stock. Are you a key employee? The higher you are on the totem pole and the more sensitive company secrets you are likely to possess, the more reasonable a court may find in enforcing a non-compete clause. The law basically tries to prevent people from being unemployable for no justifiable or fair reason.

Most of the time when I've seen these from larger companies they tend to be absurd along with something called a "savings clause" which essentially goes something like "and in the event all of this is deemed ridiculous by a court of law, you agree to be held under the maximum limitation permissible by law as found by the court." But do not despair. I've seen companies allow certain employees to leave without a fuss. If you're in good standing it's possible that it may be able to be worked out. This may involve some negotiation and personal skills. Best of luck to you.