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A Brief Guide to Understanding Non-Compete & Arbitration Clauses in an Employment Contract

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If you’ve signed an employment contract, chances are you might have entered into a non-compete agreement with an arbitration clause. Non-competes are becoming increasingly common. They provide protection for the employer and are usually highly limiting and unfair to employees.

Not all employees completely understand their employment contracts before signing. This leads many workers to enter into unfair agreements and puts them in a difficult position should they and the company part ways.

In this article, we’ll briefly explain what non-compete agreements are and how they can be biased against an employee. We’ll also discuss arbitration clauses and hearings and explain why you should always have an experienced attorney to support you through the arbitration process.

What is a Non-Compete Clause?

A non-compete clause, or a covenant not to compete, is part of many employment contracts. In signing one, an employee agrees not to obtain a similar job at a competing organization should he or she leave the company. This restriction has a geographic scope and a time duration. For example, a non-compete clause may require the employee not to work for a competitor who is within 100 miles of the employer for a period of 2 years after the separation from employment. Employers do this to protect any confidential information about their business that could be used against them by an industry rival.

In recent years, non-competes have become standard in many industries. While they serve an important function, some non-compete clauses can be incredibly strict and encompassing, limiting the available work options for former employees. In these cases, the person must either contact an employment lawyer to help invalidate the non-compete or breach the contract which can lead to serious legal repercussion.

What is Arbitration?

Without an arbitration clause, when an employer wrongfully terminates the employee, the employee can file suit in court. An arbitration agreement deprives the employee of the ability to litigate the wrongful matter in court, which is a matter of public record. Instead, an arbitration agreement requires that all proceedings in the matter be conducted confidentially. The employee is denied the benefit of having his or her case in front of a jury. The case is instead resolved by an arbitrator. A mandatory arbitration clauses essentially create a private system of “justice.”
In most cases, the arbitrator’s decision is final and binding, denying the employee of any appeal rights. Employers are now seeking to use mandatory arbitration to prohibit employees from bringing class action lawsuits.

Growing evidence suggests that mandatory arbitration produces results that are significantly different than cases that are litigated. Employers have the advantage because they set the terms of the arbitration. Arbitration results are often disadvantageous to employees, who are deprived of their right to due process. This is why it is imperative that employees seek out experienced legal assistance to help support their claim.

Contact The Law Firm of Jacobson & Rooks, LLC for Legal Advice

If you have entered into an unfair non-compete agreement that is limiting your right to earn a living, or if you are preparing to enter into arbitration with your current or former employer, our attorneys are here to help.

The team at The Law Firm of Jacobson & Rooks, LLC handles a range of employment legal matters. We serve clients needing an experienced team of workplace disability discrimination lawyers in Gloucester County and represent workplace sexual harassment victims in all South Jersey counties.

If you’ve been the victim of discrimination in the workplace, or if you need legal guidance with your non-compete or arbitration hearing, contact The Law Firm of Jacobson & Rooks, LLC today to discuss your case and learn the options available to you.