Many clients ask us about non-compete agreements. They’ve been controversial lately. But if done properly and used in the proper context, they are both useful to the employer and fair to the employee. A noncompete agreement can be used to protect a legitimate employer interest such as protecting company secrets, trade secrets and new developments, protecting investment made in training employees and protecting the investment in a customer list and client confidential information.
What a covenant not to compete cannot be used for is to stifle competition or prevent employees from seeking employment elsewhere. It cannot be used as a means of keeping employees from seeking alternative employment.
A covenant not to compete that is reasonable in terms of geographic scope, generally, the area where the employer is doing business or expects to expand in the foreseeable future. Reasonable in terms of duration, usually no more than two years, one year being typical and reasonable in terms of the legitimate interest that’s being protected will be enforced by the courts. An agreement that overreaches or that is poorly drafted or that is applied to employees who should not have reasonably been asked to sign a non-compete agreement, will not be enforced.
It is important to work with skilled attorneys who are experienced in the area in drafting and enforcing noncompete agreements to assure that they are used properly and will be enforceable by the courts.