If you own a business, you may be wondering if you should be looking into a non-compete agreement. Non-compete agreements are binding contracts between employer and employee to protect business interests.
However, having a valid non-compete agreement is not simple. According to Findlaw, in order for an employer to necessitate a non-compete agreement, the employee must be getting something of value in exchange.
What do I need to offer an employee?
In the event that you present an employee with a non-compete agreement at the time of hire, then employment is the “something of value” that you are offering the employee. Essentially, in return for agreeing to a non-compete agreement, you are offering a job.
However, if you are having employees sign non-compete agreements after hire, you will need to offer something else. For instance, you may offer a raise or increase vacation time.
What else must I do to have a valid non-compete agreement?
Valid non-compete agreements must be reasonable. For instance, you cannot have an employee sign a non-compete agreement which would make them unemployable if they leave your company. A court of law would declare such a non-compete agreement invalid.
In another example, you cannot prevent an employee from taking a job with another employer after their employment with you is through. However, you can have a non-compete agreement that prevents said former employee from poaching clients. If there is anything confidential about your particular business, you can use a non-compete agreement to protect sensitive information.
A valid non-compete agreement must also be reasonable in its scope. For instance, it is unlikely you can keep an employee from divulging sensitive information forever, but you can prevent it for a reasonable amount of time.