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What are reasonable terms for a non-compete contract?

July 19, 2016

Q: I live in a small town with two other nails-only salons that are not reputable and a lot of full-service salons that don’t do much with nails. I’ve been working for over six months now and just got asked to sign a non-compete contract. I’m curious about the terms of a normal non-compete agreement. The one they are asking me to sign is for three years with a 50 mile radius, which seems excessive.

Answer

<p>Erin Mindoro</p>

A: Legal parameters for non-compete agreements vary from state to state. For example, some states — such as California — will not enforce most non-compete agreements, even if the terms are reasonable. Other states — such as New York — will enforce most reasonable non-compete agreements. Generally, the interests of the employee and the employer are balanced in order to avoid enforcing an undue hardship on the employee’s right to earn a living, while still protecting the employer’s legitimate business interests. Courts typically consider balancing factors such as duration, location, and scope or extent of the non-compete.

Without knowing your state’s particular legal requirements or the full terms of your contract, at first glance it would seem that a three-year, 50-mile radius restriction could be too restrictive to be enforced, especially since there are only two other nail salons in town. You should contact a local attorney who can analyze your contract and assess its enforceability.   

— Erin Mindoro is an attorney with Berger Kahn (www.bergerkahn.com) in Irvine, Calif.

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