Noncompete agreements can be controversial inclusions in contracts. Especially when they are part of an employment contract, people may question whether the noncompete agreement is truly necessary.
There are concerns that the excessive use of noncompete agreements has a chilling effect on innovation, as employees cannot leave to start their own companies when they have groundbreaking ideas. There are also concerns about professionals facing financial hardship or forced relocations because of their employment contracts.
Regardless of the controversy they may trigger, noncompete agreements are currently legal and enforceable in Nevada. How long after the end of an employment arrangement can a business continue to enforce a noncompete?
Agreements should have a limited life span
For the Nevada civil courts to consider a noncompete agreement or similar restrictive covenant valid, the agreement must have limitations built into its scope. Frequently, companies must limit noncompetes so that they only apply to a specific geographic area.
Additionally, they must include language limiting how long they can enforce the agreement. Most of the time, there is an expectation that noncompetes should only remain in effect for a year at most.
The countdown for the end of the enforcement period usually begins when a work relationship ends, not when the worker signs the contract. There may be exceptions in cases involving business partners who accepted a buyout with a non-compete when exiting a company.
Employers may need to evaluate the initial contract, the timing of the competition and other details about the situation to determine if enforcing a non-compete is a realistic expectation. Reviewing documentation with a contract lawyer can help business leaders determine if they can take action over the violation of a noncompete agreement.