Some employers require employees to enter into non-competition agreements at the time of hire, preventing them from competing with their employer during employment and during a certain time period after their employment ends. Non-compete agreements are often presented to employees with access to intellectual property, trade secrets, customer lists, business plans and strategies, and other valuable information that could potentially allow the employee to engage in unfair competition after leaving employment. Along with confidentiality, non-disclosure, and non-solicitation agreements, non-compete agreements are important tools to protect an employer’s business. However, asking a foreign worker with an H-1B visa to enter into non-compete agreement can present additional complications.
In order to remain in the United States, an H-1B worker must maintain his or her visa status by remaining employed by the employer who originally sponsored his or her visa (the “sponsoring employer”). Once no longer working for the sponsoring employer, an H-1B visa worker’s status is placed in jeopardy. The H-1B visa rules require the worker to be employed in a position directly related to their field of study and specialty. In other words, if an H-1B worker is terminated, he or she must find a similar position that relates to his or her specialty. H-1B workers are given a grace period of only 60 days between jobs. Thus, a non-compete agreement will not only prevent an H-1B worker from working elsewhere, it may also force his or her removal from the United States.
While there are not many cases addressing the enforceability of non-compete clauses against H-1B visa recipients, some of the courts that have addressed this issue have factored in the employee’s immigration status when deciding whether or not the non-compete agreement should be enforced. Typically, these cases arise when the employer seeks an injunction to bar a former employee from continuing to work for a competitor. In these cases, courts will typically weigh the employer’s legitimate business interests (trade secrets, confidential information, etc.) against the harm to the former employee if he or she is barred from continuing to work with the competitor. If the employer seeks a preliminary injunction to immediately enforce the non-compete and stop the employee from working for a competitor, most courts require proof that the former employer will suffer irreparable harm if the agreement is not enforced. Thus, while there is no blanket rule preventing an employer from enforcing a non-compete agreement against an H-1B visa holder, courts may consider the risk of deportation and may be hesitant to enforce the agreement or grant an injunction in favor of the employer.
A foreign worker looking to begin employment in the United States under an H-1B visa may be reluctant to sign a broad non-compete agreement that could potentially endanger his or her ability to remain in the US. Therefore, when considering non-compete agreements for foreign workers covered by H-1B visas, employers should consider whether the agreement would allow the workers to pursue a position directly related to their field of study and specialty (perhaps for other employers who do not compete with the sponsoring employer). In some cases, confidentiality, non-disclosure, and non-solicitation provisions may be sufficient to protect against unfair competition or damage to the employer’s business. In addition, as with all non-compete agreements, employers should ensure that the duration and geographic scope of the restrictions will be enforceable. While the reasonableness and enforceability of non-compete agreements varies based on state law, courts often balance the employer’s need to protect their confidential information and business interests, against the employee’s interest in pursuing his or her livelihood.
Employers with questions about non-compete agreements for H-1B workers and other types of non-immigrant foreign workers should contact counsel with experience in matters of employment law and immigration law.
The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.
Ivo Becica focuses his practice on advising employers on how to reduce litigation risk and resolve employee issues, and on defending employers in litigation if necessary. He can be reached at 215-667-6335 or firstname.lastname@example.org
Obermayer summer associate Antonious Sadek assisted in the preparation of this blog article.