Some factors to consider before you draft a noncompete agreement

On Behalf of | Sep 1, 2017 | Employer Liability Prevention |

Business litigation is on the rise in the United States. A U.S. federal court statistic from 2012, showed that during that one year, judges made 760 decisions having to do with noncompete agreements (NCAs). That number marked a 61 percent increase over the rate from 2002.

It’s believed that the uptick in the use of NCAs in the past few years may be able to be, at least partially, attributable to the fact that it’s become increasingly more difficult to find well-qualified and job seeking talent.

In fact, the situation is seemingly so dire that many financially solvent companies specifically target some of the more attractive candidates. If the pitch is right, they can convince them to leave their jobs unless there’s an impeding force, like a noncompete clause, at play.

Employers see NCAs as a tool they can use to regulate their income and protect proprietary information from ending up in a competitor’s hands. Before you go about drafting a noncompete clause, though, it’s important to consider a few things regarding them.

Historically, judges have looked unfavorably upon NCAs deemed to be unnecessarily unfair or too broad. If it prohibits an employee from working outside of the territory your company serves or from working for a competitor for more than a year after he or she quits, then it might be thrown out.

NCAs have the potential to boost employee morale if they’re understood to be written in both a fair and precautionary way. For example, if you operate in the sales space, requiring employees to sign a NCA may send a message to them that their sourcing and landing of clients will not be easily thrown away. Unless a NCA is in place, your staff may fear that an employee can quit and take many of their hard-earned clients with them.

It’s important to note that NCAs are becoming popular in all business sectors. You may benefit from researching your competitors to see if they’re requiring their employees to sign them. If you find out they do, then you may want to align yours with theirs. If you don’t, and yours happens to be stricter than theirs, then a prospective employee may look elsewhere.

If you’re considering drafting a noncompete agreement to protect your company’s interests, then an experienced Pittsburgh employee liability prevention attorney can advise you of many pitfalls to avoid.

Source: Insperity, “9 things to consider before asking employees to sign a non-compete agreement,” Joe Flores, accessed Sep. 01, 2017