Real-World Solutions To Real-World Challenges

The importance and utility of non-competition agreements

On Behalf of | Jun 2, 2016 | Contract Disputes |

When you think about it, employment is actually a very complex deal that a company and an individual agree to. On the surface, it seems so simple: the company needs a position filled and a person wants a job. How simple! But employee contracts are filled with important legal information and legitimate protections for both sides to ensure that the deal is worthwhile for the company and the employee.

One critical piece to the employment formula is the non-competition agreement. Most employee agreements have an “NCA” in them. These agreements protect the company from an employee leaving the company to join a competitor (or some other company) and spilling the secrets of the company the employee formerly worked for. Those trade secrets and business processes that the first company used are very valuable, thus the NCA is a way of protecting that information.

Now, since non-competition agreements can, in theory, limit a person’s ability to find new work, it is important for the company using the NCA to ensure the document is proper in scope and that it is compliant with the law — otherwise, a judge may not approve of the NCA and strike it down if litigation were to commence.

To ensure “scope,” make sure that your document doesn’t hold the employer to the NCA for too long and that the interest your are protecting isn’t too broad. Your contract also shouldn’t limit the former employee’s ability to work in certain geographical locations.

Source: FindLaw, “Non-Competition Agreements: Overview,” Accessed May 31, 2016