Those subject to noncompete agreements have likely experienced a roller coaster of emotions in recent months. In April of 2024, the Federal Trade Commission (FTC) announced a nationwide ban on noncompete agreements. In theory, this new rule could release workers from unfavorable terms that they agreed to when accepting a job.
However, a federal judge in Texas recently ruled that the ban is unenforceable because the FTC overstepped its organizational authority with this new policy. In other words, noncompete agreements remain enforceable contract inclusions in Indiana and elsewhere. Those who may have dreams of accepting a new job or starting their own company now have to worry about their employers suing again.
What do workers who have previously signed noncompete agreements or who may need to sign one as part of a new employment agreement need to know about noncompete agreements in Indiana?
Limits are necessary for enforceable agreements
Indiana, like most states, allows employers to take legal action if a worker violates a noncompete agreement. However, the agreement itself must be legally valid for a lawsuit to succeed.
If a noncompete agreement applies indefinitely and to any and all locations, it could impose an unfair hardship on professionals. For noncompete agreements to be valid and enforceable under Indiana state rules, employers typically need to limit the documents both geographically and temporally. In some cases, companies restrict employees from going to work for specific competitors.
Typically, the agreement should only remain in effect for a set amount of time after the worker leaves their position with the company. Additionally, they should be able to relocate in pursuit of a job or when choosing to start a business in the same industry.
There may also be a nondisclosure agreement to consider. Understanding the rules that apply to non-compete agreements in Indiana can help workers explore their future opportunities and negotiate when accepting a new position.
Noncompete litigation can be very expensive for workers. Reviewing noncompete agreements with a skilled legal team before taking a job or making a career move – and even afterward, if necessary – can help workers protect themselves from the risk of a lawsuit.