In today’s fast-paced business world, it’s common for employers to ask their employees to sign a non-compete agreement. These agreements are designed to protect the employer’s business interests by preventing employees from leaving the company and taking valuable confidential information, trade secrets or client relationships to a direct competitor.
As a professional, I’ve had plenty of opportunities to review non-compete agreement language. Here are some important factors to consider when drafting or reviewing a non-compete agreement:
1. The definition of the prohibited activity
For a non-compete agreement to be enforceable, the prohibited activity must be clearly defined. The language should be specific and unambiguous so that both parties understand what is prohibited. For example, a non-compete agreement might prohibit an employee from working for a direct competitor in the same geographic area for a certain period of time.
2. The duration of the non-compete agreement
Courts are generally more likely to enforce a non-compete agreement if the duration is reasonable. What is considered reasonable can vary depending on the industry, the job position and the scope of the prohibited activity. A non-compete agreement that is too long or overly restrictive may be seen as unreasonable and unenforceable.
3. The geographic scope of the non-compete agreement
The geographic scope of a non-compete agreement should be reasonable and related to the employer’s legitimate business interests. For example, if the employer only does business in a certain region, it may not be reasonable to prohibit an employee from working for a direct competitor outside of that region.
4. The legitimate business interests of the employer
For a non-compete agreement to be enforceable, the employer must have legitimate business interests to protect. This might include confidential information, trade secrets or client relationships. The language of the agreement should clearly identify the employer’s interests and how they are being protected.
5. The consideration given to the employee
To be enforceable, a non-compete agreement must provide some benefit or consideration to the employee. This might include access to valuable training or confidential information, a higher salary or a promotion. If the employee receives no benefit or consideration in exchange for signing the agreement, it may not be enforceable.
In conclusion, non-compete agreements can be an important tool for protecting employers’ legitimate business interests. However, the language of the agreement must be carefully drafted to be enforceable. By considering the factors above, employers and employees can ensure that the non-compete agreement is fair and reasonable for both parties.