Do I still need to worry about a non-competition agreement?
This article was originally published by The Hamilton Spectator.
Q: Do I still need to worry about a non-competition or a non-solicitation agreement that I signed with a former employer?
A: It is somewhat complicated, but yes. The Employment Standards Act, 2000 of Ontario recently codified what judges across Canada have already been saying for a long-time about non-competition agreements: which is that most if not all such agreements (preventing an employee from working for competitors after they leave their job) are illegal and unenforceable. That law is now codified in statute (the ESA), as well as in the common law. (Non-competes are still, however, permitted under the ESA for certain sale-of-business situations and for positions like chief executives.)
As for non-solicitation restrictions, the story is somewhat different. Non-solicitation restrictions are another brand of restrictions, which are more laser focused on trying to prevent former workers from actively contacting customers or co-workers with a view to luring business away in that fashion (as opposed to just going to work with a competitor).
When it comes to explicit written “non-solicits”, the law has not really changed; non-solicits can still be enforced at court if they are ‘reasonable’ in their wording, duration and scope. So, these agreements are still ones that employees need to be careful about when leaving a company to work elsewhere. Finally, it is worth noting that judges sometimes find that key employees owe implied (unwritten) duties to their former employer, under the common law, to not solicit customers and employees for a period of time.
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