Non-Compete Agreements and Employment Contracts

Rob A. Howard III | Hopkins & Huebner, P.C. | Des Moines Office

Commonly found in medical, sales, and other employment agreements, a non-competition agreement (non-compete) can restrict the time and area you are able to practice your trade. For better or worse, non-competition agreements are enforceable in Iowa.  These are agreements, meaning that the party that it is being enforced against, usually an employee, did agree at one time to the restriction.  Most employment agreements with a non-compete in them do not become an issue; the employee is satisfied as is the employer.  Unfortunately, if you find yourself being concerned about a non-compete, the fact that most employees are happy and you agreed to it, under different circumstances and with different knowledge, is of little comfort.  Luckily, there are a couple of things you can do to limit the burden of a non-compete.

An ounce of prevention is worth a pound of cure  

The best time to review a non-competition clause in a contract is before you sign the contract.  While many employers will not enter into an employment agreement unless there is a non-compete clause, it never hurts to ask.  Assuming the answer is “no,” part of the contract negotiation can be working on limiting the time and area restriction to a point that the employee finds acceptable.  If one prospective employer in that field will not limit it, perhaps the next prospective employer will, but you’ll have to ask.

Hindsight is 20/20  

Negotiating a contract is all well and good, but what if you’ve already signed?  Well, it might not be enforceable.  While Iowa does enforce non-competition agreements, it does so begrudgingly.  It is possible that your current employer wrote the agreement too broadly and it is thus unenforceable, at least to the extent that it is written.  To determine if the non-compete is valid, courts ask these three questions: 

1. Is the restriction reasonably necessary for the protection of the employer’s business?

2. Is it unreasonably restrictive of the employee’s rights?

3. Is it prejudicial to the public interest?

What does this mean for any particular non-compete?  Well, to quote every lawyer ever, “it depends.”  The answer to the three questions asked by Iowa courts is extremely fact specific.  What is true for one employment position is not true in another.  This doesn’t mean that it is different every time.  There are guideposts.  To determine how it might impact you specifically, you’d likely want to review the past decisions that most closely mirror your specific circumstances with an attorney.