Incorrect, in a practical sense: If you would win after fully litigating the non-compete, but doing so would cost millions of dollars, whether or not the state is considered to be enforcing it is a distinction without a difference.
Not really. If you are not being paid, you can just take a new job during the non-compete period and if your previous employer sues you they will lose, and they know it.
They could still sue you just to make a point and make you spend money on a legal defense, but it's unlikely you'd spend millions of dollars.
In my case, employer didn't want to pay. Hired some lawyers to send a letter saying that either they paid me or the non-compete was invalid and ended up getting paid full salary for the duration.
I’m sure your anecdote will be comforting to all of the people who have worked for a certain Wisconsin EMR company and have tried to work for an even vaguely medically-related company within a few years of leaving.
“If your previous employer sues you they will lose” is not the counter you think it is. You were lucky they didn’t litigate and luckier still that they didn’t consider a non-compete of outsized importance like that Wisconsin company does: Some employers are extremely litigious, and will try to exhaust you in court because they believe they’re protecting internal secrets.
That sort of thing must not be discounted when considering what advice is appropriate in this kind of situation—and especially what the overall policy of a society should be: If the company I referred to above were a California company and you were an employee in California, “they will lose” and “you won’t spend millions” (or at least “you’d recover costs”) would actually be accurate.
You are right that this is state dependent, and I am certainly not a lawyer.
I have no direct knowledge about WI. My personal experience concerns NJ/NY.
Still, what I understood at the time is that, if the employer is not paying you at all during non-compete period, they will have a hard time enforcing it anywhere.
I am also surprised by the claim that it could cost millions to litigate about something like this, how confident are you of that number?
(And about CA, my understanding was that noncompetes are simply to allowed there, so it wouldn't even apply)
I’m fairly confident that at least certain employers who have deep pockets and are obsessed with non-competes (like that EMR) company would spend many, many times someone’s annual salary to ruin them for daring to try to work in an even tangentially similar industry (such as wearable health hardware) before their non-compete expires.
That specific company is delusional about where their profit comes from; they (specifically their founder/CEO and the surrounding execs) think it’s because of their awesome “ultra secret” technology and not a combination of regulatory and inertial lock-in. Like, they literally think their MUMPS codebase and the non-relational database backing it are what make them great, rather than something they’re successful in spite of. (And it does, to the degree that it encodes a huge amount of domain knowledge—derivative domain knowledge, based on the law, regulation, and insurance policies…)
But in that case, you're still limited in your choice of new employers, to ones that have both the ability and the will to spend significant sums of money challenging your former employer in court.
That's going to be a pretty harsh limitation in itself.
And what “certain pay out?” The company sues the former employee, if the employee wins they get to keep their job, effectively making that job cost millions. The employee would have to countersue, and that would carry quite a lot of risk of failure even if the employee wins the original suit.
You’re presuming the employee is suing to be released from a non-compete. Usually it’s the other way around, with a former employer suing to hold a former employee to a non-compete.
If you countersue a former employer that is suing you to enforce a non-compete agreement, that would probably be a significant element of the countersuit, yes.
Hope you have the funds to see that through to completion including all the appeals! It’s not like tortious interference is a crime the state would prosecute—just like violating a non-compete isn’t a crime where the state would prosecute. Civil actions are handled via lawsuits and they’re expensive.
