How to craft a valid noncompete agreement

On Behalf of | Oct 23, 2020 | Employment Law -- Employer |

Although noncompete agreements have come under scrutiny in recent years, they can be effective tools for Pennsylvania companies that are looking to protect their interests. Generally speaking, this type of agreement forbids an employee from working for a direct competitor for a certain period of time after he or she is terminated.

How to craft a valid noncompete agreement

Typically, a narrow agreement is more likely to survive a legal challenge than a broad one. Therefore, it may be best to apply restrictions to a key group of workers who are privy to trade secrets or other sensitive information. Furthermore, it is important that the terms of the pact itself are as limited as possible. For instance, your company might be able to get away with preventing an individual from working for a competitor in the same state for a year.

However, banning a person from obtaining any type of employment for five years following a termination would typically be seen by a court as too broad. It can be a good idea to add a savings clause to the agreement as it would allow the deal to remain intact if any of its clauses are struck down.

Don’t be afraid to enforce the agreement

A noncompete agreement is useless if an employee doesn’t believe that he or she would actually be punished for violating its terms. In the event that the terms of such a contract are violated, your company may be entitled to injunctive relief or other damages. It is important to note that you might need to be flexible as to where a lawsuit is filed. Requiring an employee to travel an excessive distance to defend his or her rights in court could jeopardize your chances of obtaining a favorable ruling in court.

A business law attorney might help your company protect its interests by crafting or reviewing the terms of a noncompete or nondisclosure agreement. If necessary, an attorney may be able to represent your company in court if the terms of such an agreement are challenged by an employee.