South Carolina Non-Compete Agreement Laws: What You Need to Know

Non-compete agreements, also known as restrictive covenants, are contracts between employers and employees that limit the employee`s ability to work for a competitor or start a competing business. Non-compete agreements are becoming increasingly common in South Carolina, especially in industries like technology, sales, and healthcare. However, there are laws that govern the use of non-compete agreements in South Carolina, and it`s important for employers and employees to be aware of them.

Enforceability of Non-Compete Agreements in South Carolina

Non-compete agreements are generally disfavored in South Carolina, but they are enforceable under certain conditions. In order for a non-compete agreement to be enforceable in South Carolina, it must be reasonable in scope, duration, and geographic area. The agreement must also protect the legitimate business interests of the employer, which could include confidential information, trade secrets, customer goodwill, or specialized training. The employer must also provide the employee with something of value in exchange for signing the non-compete agreement, such as a job offer, a pay increase, or access to proprietary information.

Courts in South Carolina will review non-compete agreements on a case-by-case basis to determine if they are reasonable and enforceable. If a court finds that a non-compete agreement is overly broad or unreasonable, it may strike down the entire agreement or modify it to make it more reasonable.

Non-Compete Agreements for Low-Wage Workers

In 2021, South Carolina passed a law prohibiting employers from requiring low-wage workers to sign non-compete agreements. The law defines low-wage workers as those who earn less than $15 per hour, or $31,200 per year. The law applies to all employees, including full-time, part-time, seasonal, and temporary workers.

This law is significant because it protects low-wage workers from being locked into low-paying jobs with limited job prospects. It also recognizes the inequality of bargaining power between employers and low-wage workers, who may not have the ability to negotiate the terms of their employment.

Non-Compete Agreements and Unemployment Benefits

In 2020, South Carolina passed a law that allows employees who are terminated or laid off to receive unemployment benefits even if they have signed a non-compete agreement. The law recognizes the hardship that non-compete agreements can cause for employees who lose their jobs and are unable to find new employment in their field. The law also recognizes that non-compete agreements can be used by employers to unfairly limit competition and suppress wages.

The law does not invalidate non-compete agreements, but it does provide a safety net for employees who are affected by them. If an employee is terminated or laid off and is unable to find new employment due to a non-compete agreement, the employee can still receive unemployment benefits.

Conclusion

Non-compete agreements can be a useful tool for employers to protect their legitimate business interests, but they must be reasonable and enforceable under South Carolina law. It`s important for employers and employees to understand the laws and regulations governing non-compete agreements in South Carolina in order to avoid unnecessary legal disputes and ensure that they are complying with state law. If you have questions or concerns about non-compete agreements, it`s a good idea to consult with an experienced employment law attorney.