In recent years, the Federal Trade Commission has tried to eliminate contractual non-compete clauses. This commission sees these clauses as barriers that prevent employees from career growth because they cannot pursue better opportunities in the same industry.
However, many businesses rely on non-compete clauses because they provide very specific protections. This is how these clauses can protect your business.
They protect your intellectual property
Innovation is a big part of business today. In fact, when companies are not innovating, they are not effectively competing. These innovations become intellectual property. Your company can pursue patents, trademarks and copyrights on products and processes. However, you may have intellectual property that you have not protected with patents or copyrights yet. Your non-compete agreement protects this information.
They keep employees from taking company contacts to other organizations
Most of today’s companies make a significant effort to develop customer relationships. You have probably trained your staff to focus on your customers and do what they can to meet your clients’ needs. However, as employees leave your company, you do not want them to take your valuable customers with them to a competitor. Your agreement prevents former employees from encouraging your loyal customers to move to your competition.
They protect trade secrets
Some may see trade secrets as part of their intellectual property. However, you may not patent or trademark these secrets. They could include specific marketing strategies that are especially effective, internal processes or policies that produce exceptional results. Any information that you consider confidential is a trade secret. If this information got out, it could damage your company. However, a non-compete agreement can keep an employee from going to a competitor with your secrets.
Your non-compete agreements protect your company’s value and assets. Learn how your business can benefit from these clauses.