Many employees today do not stay at one job for all of their working years as many in previous generations did. Changing jobs and career paths is common today and with that dynamic comes a need for employers to safeguard their trade secrets and other valuable assets. With competition in most industries so intense, employers are now making use of noncompete agreements. Are these agreements enforceable?
A noncompete agreement is a contract an employer and an employee enter into when the employee is hired. To have an enforceable noncompete agreement, there are some questions that should be carefully considered by the employer.
— Which employees need a noncompete agreement? The employees that need to sign a noncompete agreement are those that are privy to your company’s trade secrets and other important information. An employer needs to have valid reasons for requiring an employee to sign this agreement. There also needs to be something beneficial for the employee in the agreement, which is that the employee is getting a job.
— Is the noncompete agreement too harsh or restricting? If it is, then if the employee decides to take it to court, it could be struck down. If your trade secrets will still be the basis of your business several years from now, then you may have a valid reason for making an stricter agreement.
— What market is the business in? If the company only has local customers, then it’s going to be difficult to convince a judge that the employee shouldn’t work in another state.
Being reasonable is important when you are drafting a noncompete agreement. The courts often rule for employees — after all, a company can usually handle a blow like this better than an employee could.
An attorney can review noncompete agreements for both employers and employees to determine if they are fair and within the law. This can often prevent problems after the employee leaves the company.
Source: FindLaw, “Creating an Enforceable Noncompete Agreement,” accessed May. 08, 2015