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Could your business benefit from a non-compete agreement?

Posted on in Uncategorized

Having a valued team can help any business successfully go through its daily operations and work to meet future goals. Of course, as the business owner, you want to ensure that any team members you have will protect important company information and not damage business operations should they choose to leave the company. Though this task may seem difficult, you may have the ability to create safeguards.

In particular, you may want to ensure that any business competitors cannot obtain business information from your company should a former employee of yours choose to work for a similar company. As a result, you may choose to create a non-compete agreement in hopes of protecting your company's best interests.

What is a non-compete agreement?

A non-compete agreement is a type of contract that dictates that, when an employee leaves the company, he or she cannot obtain employment by a competitor. Of course, these types of agreements need to have specific details, as you cannot simply bar an individual from gaining employment in certain areas or from certain companies forever. Therefore, your agreement must meet legal standards, including:

  • Used to protect legitimate business interests
  • Have reasonable terms
  • Sufficient consideration for the employee

These terms mean that you cannot simply create a non-compete agreement just to have one, and you must indicate the area in which a person cannot obtain employment by competitors and for how long the former employee must refrain from seeking employment in that area.

Agreement disputes

Though this type of agreement could offer some protection for your company, a former employee could potentially challenge the terms of the agreement. In particular, if your agreement does not have reasonable terms, he or she could later dispute those terms in court in order to have the agreement deemed invalid. Even if the individual agreed to the terms at the beginning of employment, a court could release him or her from the agreement if they find the terms too constrictive or otherwise unenforceable.

Creating an agreement

Because of the potential for contract disputes, you may want to do your best to ensure that the terms of your agreement are well within the legal scope. If you feel uncertain about whether your non-compete agreement is within reason, you may wish to seek advice from knowledgeable professionals. If a former employee does challenge an already existing contract, an attorney could also provide assistance during any litigation proceedings.

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