Building a successful business takes time, money, and a lot of hard work. Yet, even once you’ve established some success, you need to do everything in your power to protect it while at the same time keeping your eyes on expanded growth. This isn’t an easy task, and it requires a keen eye for successful business practices to obtain a favorable outcome. This often means knowing which legal tools are at your disposal that can help you further your business interests.
One way to aggressively protect your business while also securing top talent is to utilize non-compete agreements. These restrictive agreements, which are often found in employment contracts, set parameters on the type of work an individual can perform upon leaving your employ. This can prevent competitors from taking away your edge by simply hiring your former employees and milking everything they know from them for everything they know about your business and its operations.
Limitations of Non-Compete Agreements
The restrictiveness of a non-compete agreement isn’t boundless, though. Instead, a court will only find it enforceable if every factor taken into consideration is reasonable. These factors include:
- The type of restrictions
- The length of those restrictions
- The geographical scope of the restrictions
There are some statutory presumptions in place to help provide some guidance as to what constitutes reasonableness, but there is often room left for legal argument. If you’re agreement prevents an individual from working in the same industry anywhere in the country for the next decade, for example, then the court will likely find the agreement unreasonable and thus invalid. On the other hand, an agreement that prohibits employment at identified competitors for six months is likely to be deemed reasonable.
Also, in order for one of these agreements to be deemed legally valid, it must be reduced to writing, be signed, and seek to protect a compelling business interest. A compelling business interest may include the protection of trade secrets, confidential information, and/or business practices. It’s important to note, though, that the onus is on you to show that your restriction furthers a compelling business interests and isn’t simply meant to harm your competitors and your previous employee.
Therefore, in order to ensure that you have the protection you seek, you need to be careful in how you draft these agreements. They can’t be too vague or too broad, and they need to clearly be reasonable given the circumstances at hand. This requires having knowledge of the law and possessing skill at negotiating and contract drafting.
Enforcing a Non-Compete Agreement
The only way to have an effective agreement is to police it and take legal action as necessary. This requires you to keep your eyes and ears open, especially when it comes to your competitors’ practices. You need to be quick to try to address any breaches that you identify, whether through negotiation or litigation. After all, if you fail to do so then your business could be at a distinct disadvantage.
So, while a non-compete agreement can be extremely beneficial for you and your business, you need to really know what you’re doing before you embark down that path. Fortunately, legal teams that are experienced in business law matters can help you come up with a strategy that best protects your interests