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.