Non-compete agreements, also known as restrictive covenants, are legal contracts designed to restrict an employee from engaging in competitive activities in the future that could damage their current employer, such as working for a competitor or starting a competing business.  

Non-Compete Agreements are usually written to occur for a specified period of time and within a defined geographic area after leaving the current employer. These agreements are often utilized to protect a company's trade secrets, confidential information, and competitive edge in the marketplace.  

When used well, these agreements help a company feel confident about providing trade secrets to employees.  When used poorly, however, Non-Compete Agreements can turn into overly restrictive prohibitions on the finding of a new job within an employee's skill set.  Therefore, these Agreements must follow specific legal rules that limit how restrictive they can be. 

As the enforcement of non-compete agreements varies by jurisdiction, employers must also be aware of their local rules. Some jurisdictions may have stringent requirements regarding the reasonableness of the restrictions, the duration of the non-compete period, and the geographical scope. Employers should carefully consider the legal landscape in their specific location when drafting non-compete agreements to ensure they adhere to local laws and regulations.

The main concern in drafting a non-compete agreement is the need for specificity. To be enforceable, these agreements must clearly define the scope of prohibited activities, including the nature of the competitive activities, the geographical area covered, and the duration of the restriction. The limitations imposed should be reasonable and necessary to protect the legitimate business interests of the employer, without overly burdening the employee. Courts are generally more likely to enforce non-compete agreements that are narrowly tailored to protect specific, identifiable business interests rather than broad restrictions.

Non-compete agreements are best utilized in industries where employees have access to sensitive information, trade secrets, or proprietary processes that, if disclosed, could harm the employer's competitive position. For example, in technology, healthcare, or research and development sectors, where innovation and intellectual property are crucial, non-compete agreements can be instrumental in safeguarding the company's valuable assets.  When properly drafted and utilized in industries where protecting proprietary information is paramount, these agreements serve as valuable tools for employers seeking to maintain a competitive advantage in the marketplace.

Contact Us Today with any questions about your Non-Compete Agreements!