Non-compete agreements are a common tool used by employers to protect their confidential information and trade secrets from being shared with competitors. However, these agreements are often drafted in a way that leaves them open to interpretation and potential loopholes. To ensure that non-compete agreements are effective, it is essential that they cover specific aspects of the employee`s post-employment activities.
1. Industry and Geographical Scope
Non-compete agreements should clearly define the scope of the industry and geographical area that the agreement covers. This ensures that the employee is aware of the specific limits of their non-compete clause and doesn`t unintentionally violate it. Employers should consider the competitive landscape in their industry and the locations where their business operates before drafting these clauses.
2. Duration of the Non-Compete Agreement
The duration of the non-compete agreement is another crucial factor that should be covered in the agreement. Employers need to consider the nature of their business, the potential impact of an employee leaving, and the level of competition in their industry before deciding on the length of the non-compete clause. Typically, non-compete agreements should not exceed two years from the date of termination.
3. Job Responsibilities
Non-compete agreements should also cover the specific job responsibilities of the employee. This includes detailing the employee`s access to confidential information, trade secrets, and client lists. Employers should consider the employee`s access to information that is critical to the business and only restrict non-compete clauses to the extent necessary to safeguard their assets.
4. The Definition of “Competition”
Defining the scope of “competition” is critical to drafting an effective non-compete agreement. Employers should be specific about the types of businesses or industries that are considered competitors. This ensures that the employee understands what activities they are restricted from engaging in post-employment and helps avoid ambiguity.
5. Consequences of Breach
Finally, non-compete agreements should include specific consequences for breaching the agreement. This could include monetary damages, injunctive relief, or other remedies available under the law. Adding these provisions will give employers an added layer of protection against former employees who violate the non-compete agreement.
In conclusion, non-compete agreements are a critical tool for employers to safeguard their confidential information and trade secrets. To ensure that these agreements are effective, employers should draft them in a way that covers industry and geographic scope, duration, job responsibilities, the definition of competition, and consequences of breach. This will protect the business from potential damage that may arise if an ex-employee violates the non-compete agreement.
