What is a non-compete agreement?

What is a non-compete agreement?

| Feb 17, 2021 | Uncategorized |

Businesses invest time and resources into their employees and products. A non-compete agreement is one method to protect this investment. These are contracts that prevent employees from taking part in markets or professions that may directly complete with their employer.

Non-compete agreements defined

Non-compete agreements are intended to stop employees from working for or becoming competitors for a certain period or share confidential information. These agreements are also known as a noncompete, noncompete clause, noncompete covenant and covenant not to compete.

These agreements are enforced when the relationship between an employer and employee ends and the employer seeks to prevent the employee from competing against them by working for a competitor or beginning a similar business. These are also intended to stop the departing worker from recruiting other employees for their new position.

Non competes are often used to cover consultants and independent contractors who worked for a business to prevent them from helping competitors.

These agreements may prevent former employees from disclosing secrets or sensitive information about their business operations, clients and customers, pricing, strategies, compensation, methods, ideas, potential products or services, public relations and plans for marketing.

Contents

Noncompetition agreements should be fair for all parties. Certain information helps make them enforceable. This includes its effective date, the reason for having the agreement, a realistic period, covering when an employee cannot compete against the employer and the locations it covers. Non competes should also contain compensation terms for the employee’s agreement to enter the noncompete.

Enforceability

To be enforceable, these agreements need to have reasonable restrictions on where an employee can work and an exact time that should elapse before an employee can engage in work in that field again.

Florida law dictates that noncompete agreements must be reasonable in time, area, and business. Employers should show the existence of at least one legitimate interest such as trade secrets, valuable confidential information, good will, extraordinary or specialized training and relations with customers, patients, and clients.

Advantages and disadvantages

These agreements have advantages and disadvantages. On the plus side, noncompetes can protect trade secrets, help reduce turnover and encourage employers to provide extensive training.

Disadvantages include the reduction of an employee’s bargaining power and the possibility that an employee may leave the profession and take their expertise with them.

Attorneys can assist employers with drafting these agreements. They can help assure that non competes comply with Florida law and are reasonable and enforceable.