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A non-compete agreement could be right for your business

On Behalf of | Mar 31, 2022 | Business Litigation |

Whether you have a small, medium or large business, you need to take steps to protect your intellectual property and other proprietary business property. Your business may have important data such as your customers’ addresses or phone numbers. Your business may also have special formulas, software, recipes or other information that you need to keep private.

When you’re working with another business or hiring in your own employees, you need to protect the information that keeps your business unique and profitable, which is why a non-compete agreement may be a good choice.

What does a non-compete agreement do?

At its core, the non-compete agreement is designed to minimize the risk of someone else taking your business’s proprietary information to a competitor or to use it to build a competing business. When you have an employee or contractor sign a non-compete agreement, they are agreeing that they will not disclose proprietary information to others.

Your agreement may be based on:

  • Geography, such as how close you are to a competing business
  • Time, including how long your employees or contractors agree not to share information or work for a competitor

Usually, you’ll add in aspects of both. For example, you may state that Employee A may not work in the same field for two years following their termination if they are looking for a job within 300 miles of your business. Remember, your non-compete agreement does need to be specific, too. So, if you’re asking your in-house software developer not to work in the same field, what does that mean to you? Does that mean that your gaming developer won’t work in the gaming industry? Does it mean that they won’t take a software development role in the industry but may take a different role within it?

The more specific you are, the better your non-compete agreement will be. Additionally, being specific and reasonable with your non-compete agreement will encourage a court to uphold it instead of invalidating it due to it being too extreme or restrictive.

If you run into a problem with someone violating a non-compete agreement, making sure the agreement is legally binding will help you hold them accountable.

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