Is your non-compete agreement fair?
Some of your employees may need to know sensitive information about your company in order to do their jobs. In this situation, you may require them to sign a non-compete agreement. You want to make sure that this document will protect your information but is also fair to your employees.
There are a few things you should consider as you draft a non-compete agreement.
Who needs to sign the document?
Business Law Today says that some business owners may want to have all of their employees sign a non-compete agreement. However, this may not be the best strategy. Only certain employees may know private details about your company. A non-compete agreement might not be valid if it is binding for every employee, including the ones who do not access company secrets. You may want to evaluate each employee on a case-by-case basis and draft an agreement tailored to the kind of knowledge that an employee has.
What are the restrictions?
A non-compete agreement should typically include restrictions that make sense. You may want to say that an employee cannot work for a competitor in Arizona for the next five years, for example. However, a court may rule that the agreement is not valid because it potentially prevents an employee from working in the state. A more reasonable time limit might be one year.
Additionally, you may have to be careful about your geographic restrictions. If the document keeps an employee from working at a similar company across the southwest, it may not be valid. A more fair restriction could include just the state of Arizona.
As you draft a non-compete agreement, you may want to keep your employees in mind. If the document is too restrictive, it could violate your employees’ rights to find a job.