When you hire employees, they have to learn certain trade secrets. They need to understand how to do their job, they may have access to sensitive information and they could work with clients and customers that you want to keep long-term.
As a result, you may decide to use a non-compete agreement. This way, if an employee leaves your company, they’re not allowed to start a competing business or work for your direct competition. This is just one more way that you can work to protect your intellectual property.
But you do need to understand that these agreements have a certain scope and they have to have limitations. Three of the main ones are discussed below.
First of all, a non-compete agreement cannot be binding without end. Many of these agreements are just set up for a year after the employment is terminated. It’s fine to protect your business, but an agreement that says the person can’t work for the competition for the rest of their life would be far too limiting for their career. They still have a right to earn a living.
You also have to think about where they are working and who the competition really is. Someone who leaves Texas and moves to a different state can’t be bound by your non-compete agreement. But someone who tries to work for the competition in the same city certainly could. Just make sure to define where you want the agreement to apply.
Finally, you may only be able to use a non-compete agreement within a specific industry. If someone switches industries, even if you technically think they’re working for the competition or in the same area, you may not be able to prohibit them from taking that job. There has to be a tangible reason why the non-compete agreement is in place and it has to protect your business.
Setting it up
You do not want to make any mistakes when setting up these agreements or enforcing them, so be sure you know what legal steps to take. If you believe an employee has already breached such an agreement, then you definitely need to act quickly so that your intellectual property is not compromised.