Your Employment Agreement May Restrict Your Ability To Start a Business

Your employment agreement and similar contracts you have with your employer can affect your ability to start your own RV-based business. They may have covenants on how, when, and if you may compete.

Employment Agreement Restrictions

by Martin M. Shenkman, CPA, MBA, JD

Read and study it long before you actually give notice. There are a host of significant points. Some of the matters are administrative. Others go to the core of your ability to launch a new business.

A key provision to consider is a covenant not to compete. This is a legal restriction found in many employment agreements designed to make it difficult for you to compete with your former employer. If you plan to open a similar business on your own, you must understand the nuances of what this restriction includes. Don't assume that simply because you'll be hopping in an RV and driving across a state line, or hundreds of miles away, that you're in the clear.

Covenants not to compete can be structured in many different ways.

Covenants may prohibit you from doing business with customers of your employer for several years. A customer non-compete might be, depending on your plans, much tougher than the commonly used mileage covenants.

Mileage covenants restrictions generally prohibit you form competing within a certain number of miles of your former employer. These can be tricky. How are the locations of your employer defined? Is it every warehouse and office? Or just the headquarters?

With the internet being so important to many businesses, the clauses might be quite broad and complex. If you have any doubts about whether your employment agreement will let you be clear to conduct the business you anticipate, hire an employment lawyer to review it for you.


Martin M. Shenkman, CPA, Esq. sponsors a free legal website

Martin is an RVer with a special cause. He is an avid fundraiser for the National Multiple Sclerosis Society and The Michael J. Fox Foundation For Parkinson's Research. Besides RV business tax and legal information, he will share some of his RVing and fundraising experiences with us.

Caution: This article and other columns can never substitute for professional legal, tax, and accounting guidance. These columns can provide only broad general advice, which may not apply to your situation. The rules differ substantially from state to state. Tax, business, and other laws change rapidly over time so there can be no assurance that the information in this column is current. The best approach is to review the ideas in this article with your own CPA and attorney. The application of general tax and legal principles to some of the unique facts presented by RV working is particularly complex and there is little specific law providing guidance to rely upon.

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