What are the disadvantages of non-compete agreements for employers?

On Behalf of | Feb 14, 2022 | Intellectual Property |

Non-compete agreements generally are quite beneficial to employers. While the law requires they provide benefits to the employee as well, there are still situations in which the agreement may not be good for both parties.

If you want to implement a non-compete agreement for your employees, you should make sure that it will not leave you at a disadvantage. IPL.org explains there are a few things requiring a non-compete agreement could do to your business that you want to watch for.

Problems securing employees

Some people will not take a job if they learn there is a non-compete agreement requirement. If you make existing employees sign one, you may end up losing them as well.

Legal issues

Noncompete agreements can also increase the chances you will have to go to court. Litigation can be quite expensive. You need to be sure that you are ready and able to handle a lengthy court battle over non-compete agreement issues.

On top of having to spend the money and time to go to court, you are at risk of the court siding with the employee. That can be quite costly. Many courts will scrutinize these agreements because they want to be sure they are fair to both parties. If the court finds anything unbalanced, you could end up footing the bill for the whole court case and any damages the judge awards.

Overall, you really need to be sure that a non-compete agreement is a necessity in your business. When crafting it, make sure you follow the law. You also want to ensure employees understand the terms and make the process of entering into the agreement easy for them. Being careful about implementation can make it less likely that an agreement turns into a negative situation for you.