Non-compete agreements, also known as non-compete clauses (NCCs), are contracts that forbid employees from working for a business’ direct competitor or from becoming competitors themselves for a specific length of time after departing from the business. To make this simpler, it is a contract that prohibits an employee from reaching out to former clients.
The Nature of Non-compete Agreements
Non-compete agreements are put in force when relations between employers and employees are over. At that point, the employers seek to keep the employees from competing with them in their next place of employment. That means either with a competing company in the same marketplace or through their own organization in the identical area of business. Such agreements also proscribe employees from asking other members of the original company’s team to leave and work with them in a new venture.
Businesses that May Need an NCC
There are many instances where an NCC may be useful. For example:
- If your business uses consultants and/or independent contractors
- Has employees who, upon ending their relationship with your company, may begin working with a competitor
- Has employees that may start their own business and gain a competitive edge by exploiting your classified data
Such data might include:
- Trade secrets
- Ways of operating
- Sensitive information
- Client lists
- Proprietary business practices
- Product formulas
- Pricing methods
- Marketing strategies
- Employees’ salaries
- New product ideas
- Upcoming products
- Public relations plans
Such workers are frequently required to sign non-compete clauses to avoid the chance of their taking competitive action after their departure from your company. It is meant as a way to protect your business should a relationship sour in the future.
Legal Advice is Vital in Creating a Non-Compete Agreement
Although their objectives may be clear-cut, non-compete agreements need to meet several specific conditions to be put into force. Also, the validity and enforceability of non-compete contracts fluctuate from state to state and from one jurisdiction to another. For these reasons, it’s essential to seek the help of experienced legal counsel to review your non-compete contract. You want to make sure it’s not detrimental or excessively limiting to employees while still meeting your needs.
If you’re considering implementing a non-compete contract for your business, call Bell & Shaw Law, LLC today. We offer a free consultation to discuss the specifics of your case. Our skilled business attorneys can help you to draft an agreement that is both responsive to your wishes and equitable to your employees.
