Non-compete agreements have become controversial in recent years, and there are valid reasons for concerns: Far too many employers have forced employees to sign them in unethical ways, and as examples of minimum wage employees being kept from leaving for better jobs have been publicized, there’s been a justifiable outcry. As the government weighs restricting the use of non-compete agreements, it’s important to remember that there are good reasons and practical considerations surrounding their use.

The most important reason for using a non-compete agreement is to protect a company’s proprietary trade secrets and information. Employees in a position of trust have access to confidential strategies that, if shared with competitors, could jeopardize a business’ profitability or edge. Noncompete agreements legally restrict employees from going to work for competitors and leveraging this knowledge for competitive advantage. They not only keep proprietary information from being shared but also protect the employer’s investment in training and educating the employee.

Though many decry the use of noncompete agreements as restricting innovation and research, proponents of their use argue that noncompete agreements protect their investment in research and development. It would be a significant financial blow to any company to have another organization take advantage of years’ worth of innovation simply by hiring an employee who understands the inner workings of their discoveries and inventions.

Another good reason for a company to ask an employee to sign a non-compete agreement is the preservation of customer trust. Customer-facing employees represent the organization’s brand, and when such a staff member leaves for another, competing organization, clients can be tempted to follow them and buy products or services from the employee’s new company. This is particularly true of customer service and sales account representatives, whose job relies upon building goodwill with valuable clients.

Another consideration that is rarely mentioned but which justifies the use of a non-compete agreement is to facilitate mergers and acquisitions. As one organization sets out to acquire another, they want to know that key employees will remain with the company that they’re buying for a set period in order to ensure stability. Having non-compete agreements in place can make a company seeking a buyer more attractive.

Not every non-compete agreement is ill-intended or meant to harm employees. For assistance in crafting contracts that will be helpful to your organization and amenable to your staff, contact us today.