Avoid these 2 errors when drafting your noncompete agreement

On Behalf of | Jun 30, 2022 | Employment Law -- Employer |

When you hire someone to work for your Pennsylvania business, you may want to take certain steps to protect your business’s private information in the event that the new employee leaves. Otherwise, you run the risk of your former employee taking your private or proprietary information and using it to serve a new employer or himself or herself.

Per the National Law Review, many business owners create non-compete agreements that set certain guidelines with regard to the information your employee gains access to when working for you. For example, your non-compete agreement might prohibit an employee from going to work for a direct competitor for a set amount of time after leaving your company. However, making certain errors when drafting your non-compete may make it unenforceable. To avoid this issue, be sure to avoid making the following common non-compete agreement errors.

1. Making restriction periods too long

While you may wish to restrict your former employees from working for competitors or otherwise competing with you forever after their terms of employment end, you need to be careful in this area. There are limits to how long you may restrict your former employees from taking certain actions in non-compete agreements. In Pennsylvania, you need to be careful not to restrict competition for more than two or three years, depending on circumstances.

2. Making everyone sign it

Not every worker needs to sign a non-compete, and in some cases, having every worker, regardless of duties, do so may come back to bite you. To be enforceable, a non-compete must be “reasonably necessary.” This typically means the worker who signs it must have specialized skills or access to private company information, and not all employees have these.

Making either of these errors limits your contract’s enforceability and has the potential to cost your business considerable money.