A non-compete agreement can make all the difference in your ability to maintain control of former employees’ actions, but only if the agreement itself is legal and enforceable. There are a surprising number of mistakes that inexperienced attorneys make when drafting these agreements, and these can lead to significant disappointment. To make sure this doesn’t happen to you, work with an attorney who has extensive knowledge of employment law and who won’t make the following common mistakes:
- Failing to provide consideration in support of the agreement – Every contract requires that something is given in exchange for what is asked. In the case of a non-compete agreement consideration usually takes the form of the job itself, but if an employee has worked for the employer for a while before being asked to sign it may need to take the form of higher compensation, a bonus, or a new title and position.
- Making the terms unreasonably broad – When an employer’s non-compete agreement makes it impossible for an employee to work in the same field for too long a period of time, for too extensive a geographic area or in some other way that is considered too broad and unreasonable, it is likely that the terms of the agreement will be considered unreasonable.
- Using the same agreement for all employees – Though creating a standard form may seem like the most practical approach to a frequently-used form, it is not a good idea for something as personal as a non-compete agreement, which is drafted with the idea that the particular employee’s ability to compete would be harmful to the company.
- Creating a non-compete agreement that isn’t necessary – The purpose of a non-compete agreement is to protect trade secrets or to prevent an employee from harming a company through some type of competitive advantage. If you do not have a trade secret or something that needs to be protected from an employee, then an agreement may be viewed as being mean-spirited, punitive, and unnecessary.
- Failing to include a choice-of-law clause – Non-compete agreements are controversial, and an increasing number of states have made them illegal or have refused to enforce them. To protect yourself from this happening, it is essential that your non-compete agreement includes a choice-of-law clause that specifies the state law under which it will be enforced.
Protecting your business is essential, so contact our team of experienced business attorneys today!