Partnership for the Good of Your Business

A primer on non-compete agreements

On Behalf of | Apr 23, 2020 | Business Law |

It takes a lot of hard work and dedication to build a business. Keeping it competitive in today’s market can be another challenge altogether. This is why businesses need to make sure they are taking the steps necessary to protect their interests as comprehensively as possible.

One way to further protect these interests is to utilize non-compete agreements. These agreements are essentially a contract between a business and an employee whereby the employee essentially agrees to limit their work that would compete with the employer once the employee leaves that employer. Since these are contractual relationships, in order for them to be legally enforceable the employee must receive something of value in exchange for their agreement to limit competitive work. This consideration may be a job offer, a promotion or some sort of compensation, whether that be money or benefits.

The enforceability of non-compete agreements

A non-compete agreement must also be reasonable in order to be enforceable. When determining whether one of these agreements is reasonable, a court will look at a couple of factors: the duration of the agreement and its scope. Of course, what constitutes a reasonable length of one of these agreements, as well as the geographic area it covers, depends on the facts at hand. For example, a small business will likely have to limit its scope since it is only competitive in a limited market. A national name, on the other hand, will have more leverage to negotiate a non-compete agreement that lasts longer and extends to a potentially larger geographic area.

Protecting your business’s confidential information

Utilizing a non-compete agreement can be a great way to protect sensitive and advantageous information and practices. It can ensure that top talent is acquired without fear that that individual will turn around and utilize the information they have obtained to work against the employer.

Although this may seem pretty straightforward, the truth of the matter is that conflict over non-compete agreements arises quite frequently. Therefore, businesses dealing with these matters need to make sure that they fully understand applicable business law before moving forward with any pending legal issues.


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