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When should businesses use non-compete agreement?

On Behalf of | Apr 20, 2020 | Business Law

Non-compete agreements are ultimately created to protect your business. Sometimes, they can feel intimidating. However, your business may need to start using non-compete agreements in your employment contracts.

What is a non-compete agreement?

Simply put, a non-compete agreement keeps your employees from working with your competitors. In it, you can define who your competition is and what type of services your employees cannot supply to other businesses. You can also say where and when the restriction applies.

For example, you may hire a marketer for your cupcake shop and restrict them from working with other bakeries in your local area for the duration of their employment at your shop.

When should a business use a non-compete agreement?

Determining if your company should create non-compete agreements can be tricky. There needs to be a genuine business concern that you are protecting. If you have concerns with these topics, you may want to consider creating a non-compete agreement:

  • Protecting trade secrets within your company, including recipes, programs, technology and processes
  • Maintaining confidential client information
  • Securing customer and client relationships, including non-solicit agreements that keep employees from taking clients if they leave
  • Clarify employee expectations surrounding confidentiality and work after they leave the company
  • Protect your business in future litigation if an employee leaves, shares confidential information or works with the competition

When you create a non-compete agreement, you will need to make sure that it will also hold up in court should a lawsuit arise. To do this, work with an experienced attorney and make sure that you are holding to reasonable expectations for your employees.