Define Non Compete Agreement and Safeguard

27 Sep Define Non Compete Agreement and Safeguard

Defining Non-Compete Agreements and Safeguarding Your Business

In today`s competitive business environment, companies have been resorting to various means to protect themselves from the competition. One such method is through the use of non-compete agreements. A non-compete agreement is a legally binding contract that restricts an employee from working for a competitor for a certain period of time, after leaving their current employer.

This type of agreement is commonly used by companies to safeguard their trade secrets, confidential information, and customer base. It is also a way to prevent employees from using the skills and knowledge acquired while working for a company to benefit their competitors.

Non-compete agreements are usually signed by employees at the beginning of their employment, but they can also be introduced later on as a condition of continued employment or as part of a severance agreement. In general, non-compete agreements must be reasonable and tailored to protect specific interests of the company, to be enforceable. Courts will not enforce agreements that are overly broad or that restrict an employee`s ability to earn a living.

Safeguards for Non-Compete Agreements

When drafting non-compete agreements, companies should keep in mind the following safeguards:

1. Reasonable Time and Scope – A non-compete agreement must have a reasonable time and geographic scope to be effective. A restriction that is too broad or vague will not be enforceable. The time and geographic scope should be limited to what is necessary to protect the company`s interests.

2. Consideration – In order for a non-compete agreement to be enforceable, employees must receive consideration, such as a promotion or pay increase. A non-compete agreement cannot be introduced unilaterally without any additional consideration.

3. Confidentiality and Trade Secrets – In order to protect confidential information and trade secrets, non-compete agreements should also include a confidentiality clause. This clause should specify what information is deemed confidential, and how it can be used or disclosed.

4. Enforcement – Companies must be prepared to enforce their non-compete agreements in court. To do so, they should keep track of employees who terminate their employment and actively monitor for any violations of the agreement.

5. Jurisdiction – Companies should also pay attention to the jurisdiction in which their non-compete agreements are written. Each state has different laws governing non-compete agreements, and it is important to understand these laws before drafting an agreement.

Conclusion

Non-compete agreements can be an effective tool for companies to protect their interests and prevent employees from competing against them. However, it is important to draft these agreements carefully and thoughtfully to avoid creating an overly broad or unenforceable agreement. By keeping in mind the safeguards listed above, companies can create a non-compete agreement that is effective and legally enforceable.