What is a non-compete agreement?

On Behalf of | Mar 20, 2023 | Employment Law -- Employer |

There are many documents your business likely requires new employees to sign when they join your company. One of these may be a non-compete agreement, which prohibits the new employee from competing with your company.

According to Reuters, a non-compete agreement prevents employees from working in a similar industry for a certain period of time after they leave your organization. With one of these agreements in place, you can keep your employees from promoting the interests of another business shortly after working at your organization.

The purpose of a non-compete agreement

There are many things that a non-compete agreement can accomplish. For example, a non-compete agreement can prohibit a new employee from working for a competing company or individual or starting up another company that offers similar services or products.

These agreements can also prevent one of your employees from recruiting former co-workers you’re your company and joining their new business.

The enforceability of non-compete agreements

Several factors must exist for the court to consider a non-compete agreement enforceable. For example, the agreement must protect your legitimate business interest, have a reasonable time limitation included and have limits on the geographic location. Your employee must also receive some benefit, such as more compensation, stock options or a better position, for abiding by the terms of the non-compete agreement.

Having your new employees sign non-compete agreements can help your operation protect its trade secrets, company relationships, specialized training and other business information. Take special care when drafting these agreements to ensure they are enforceable and that they protect the ongoing interests of your business.