Non-compete agreements have long been deployed by businesses to protect against employees taking proprietary information, trade secrets, and even the value of any training that they’ve received to competitors. Unfortunately, abusive use of these contracts in inappropriate work settings combined with overly restrictive terms has resulted in significant pushback from the public. Their use has been prohibited in some states and there is talk about a federal ban.
Businesses that are trying to walk the fine line between protecting their interests and respecting employee rights face significant challenges, but by paying special attention to the details and working with experienced attorneys, it is possible to strike a balance.
There are important considerations on both sides of the agreement that need to be taken into account. Employees are legitimately concerned about the impact that a non-compete agreement can have on their career opportunities and their ability to find another job should they leave their current employer. Any contract that keeps an individual from being able to use their skills or apply their expertise will decrease their economic mobility and are likely to be deemed unenforceable in court. On the other hand, business owners want to protect their intellectual property and maintain hard-won client relationships.
Both public policy and employers crafting non-compete agreements should strive to protect both parties and foster a competitive job market. One thing that most people agree with is that non-compete agreements are inappropriate for low-wage employees, and are too often used in a way that restricts employees from seeking advancement. Judicious use of non-compete agreements so that they are only offered to employees who have access to trade secrets or customer contact makes sense.
In more sophisticated settings, a balance can be achieved by working to ensure that the terms meant to protect the employer are not unreasonably restrictive. Terms limiting employees to a well-defined and accessible geographic area or whose limits are for a reasonable period are a good start. It’s important to remember that noncompete agreements are likely to be struck down and deemed unenforceable if they are shown to have a purpose beyond protecting proprietary information or a business’ wellbeing.
If you need assistance in crafting a non-compete agreement that will achieve this delicate balance, we can help. Contact us today to set up a time to discuss your employment agreement needs.