Q. I sought a job in a line of work where I had little experience. The boss agreed to teach me on the job, but only on the condition that I wouldn't compete with him for a year after I leave. Now I want to find a new job, but the only job I'm qualified for is with a competitor.
A. Non-compete agreements from the point of view of Jewish law are discussed at length in Rabbi Aaron Levine's book, Moral Issues of the Marketplace in Jewish Law. Rabbi Levine discusses the issue from a number of perspectives.
The first approach is that of contract law. Jewish law, much like English common law, generally does not favor "specific enforcement" of contracts; breach would normally be sanctioned through an award. Rabbi Levine suggests that we frame the agreement as one that provided such a fine for breaching the non-compete agreement, and see if the level of the fine is a fair recompense for whatever special training was obtained by the worker. As Rabbi Levine writes, "the trade secret and the training provided are both subject to a fair market evaluation." So one condition for the validity of the agreement would be that the sacrifice the worker is called upon to make is commensurate with the benefit he obtains.
Another approach is that of "informed consent" or "meeting of the minds." An agreement that does not meet this standard is known in Jewish law as asmakhta. Does the employee truly understand the agreement and consent to it? Or does he view it as some kind of formality? Rabbi Levine suggests that there may be significant obstacles for the worker in particular to truly understand the value of the right he is signing away and even the value of the benefit he is entrusted with.
There are also considerations that militate in favor of fulfilling the agreement.
In general Jewish law demands the fulfillment of agreements even if they cannot be legal enforced. The Talmud tells us that a person who doesn't fulfill is word is deemed "untrustworthy". (1) So in general we would expect a person to fulfill the agreement even if the above considerations make it unenforceable in court. However, Rabbi Levine points out that while a person may not give a promise in bad faith, without any intention of fulfilling it, a person may retract a promise if there are significant unforeseen consequences.
Furthermore, Jewish law forbids excessive interference with another's livelihood even if there is no contract or promise. While in general Jewish law upholds the right to fair competition, certain types of competition are considered unfair. In particular, it is improper for one competitor to take advantage of investments made by another. In your case, it would be unethical for you to take advantage of customer lists or customer goodwill that were substantially created by your current employer.
If you think the original agreement was fundamentally fair and you are able to find a good job while adhering to it, then you should honor your word. But if you think the agreement was originally drafted in a way that imposed an incommensurate burden on you, or you originally felt it was fair but changing circumstances have made it impossible for you to make a living while adhering to it, then there is no ethical bar to your engaging in fair competition with your former boss. It goes without saying that all relevant secular laws should be adhered to.
SOURCES: (1) Babylonian Talmud Bava Metzia 49a