Arthur R. Lehman, L.L.C.

Your non-compete agreement must hold up to challenges

With your business up and running, you were likely ecstatic about its success and the capital you invested in it. However, you have reached your goals, and your business is becoming profitable. In fact, you and your partner may be discussing expanding your staff. This introduces new cause for anxiety.

Trusting others with the operations of your business will not be easy, but by systematizing proper training and oversight, many business owners have grown their companies with the help of solid and trustworthy employees. Now think long-term: What happens when one of those trusted employees quits?

Avoiding overly restrictive contracts

Protecting your business, your intellectual property, and your tried and true practices should be foremost in your mind. Letting a worker go or accepting a worker's resignation means that the employee will be looking for a job, likely in a field similar to yours. Including a non-compete agreement in your company's employee contract will reduce the chances of a former employee taking your secrets to your competitor. However, you must carefully draft a non-compete agreement for it to be legally binding, including these elements:

  • Limited time: Such a contract cannot bind a person indefinitely. Some business advocates recommend a two-year limit, but your attorney can advise you on what is appropriate for your situation.
  • Limited geography: This prevents your former employee from doing similar work within a certain distance from your business or clients. If your business is digital in nature, you may have difficulty determining limits.
  • Limited activities: The more narrowly your non-compete agreement defines the particular work your former employee may not accept, the more likely a court will side with you if the employee contests or defies the contract.
  • Legitimacy of interests: A non-compete contract must protect some aspect of your business that a former employee will genuinely place at risk by accepting similar work in a competitor's business.

Generally, a valid non-compete agreement will protect your company without prohibiting your former employee from earning a living.

A valuable team member

The last thing you want after losing a trusted team member is to learn that your former employee is working for your competitor. The valuable training and information that the employee gained from you will undoubtedly benefit your rival, potentially damaging your business and cutting into your profits.

To avoid this scenario and the costly and stressful litigation required to correct the situation, it would benefit you and your company to have an employment contract with an effective non-compete agreement. Having the assistance and advice of a lawyer with decades of experience in legal strategies for businesses will provide you with a decided advantage.

No Comments

Leave a comment
Comment Information