There are many misconceptions and assumptions regarding the use and effectiveness of noncompete agreements. This is not too surprising considering that judicial enforcement of these agreements is very fact-intensive and situation-specific. There are no bright-line rules to help business owners determine whether a noncompete agreement will be enforceable, so it can be challenging to craft one that will provide maximum protection without being vulnerable to a challenge in court.<\/p>\n\n\n\n
1. Failing to properly identify what is actually being protected.<\/strong> One pitfall that business owners face is that they fail to put much, if any, time or effort into evaluating what legitimate business interest they are specifically trying to protect when asking their employees to sign a noncompete agreement. These agreements are often implemented for the simple reason that it seems like a good business practice from a human resources perspective. However, a deeper dive into the desired protections of these agreements is critical to ensure their effectiveness and enforceability. <\/p>\n\n\n\n 2. Using a noncompete agreement when nonsolicitation is desired.<\/strong> Similarly, executives may assume that they need to use a noncompete agreement, when in reality they need a nonsolicitation agreement (restricting someone from taking customers, employees, etc.) or a confidentiality agreement (restricting someone from using trade secrets or other information). Business owners and managers should also remember that just because a noncompete agreement may have fit the company’s needs and business activities two or three years ago, this does not mean that such an agreement is still a good fit for the business today.<\/p>\n\n\n\n If you want to add an another layer of protection to your business by implementing a noncompete agreement, there are a few questions you should ask as you get started:<\/p>\n\n\n\n Enforceability of a noncompete can vary from state to state. This can be particularly problematic for larger companies with employees or contractors throughout the country. However, even California law, which generally invalidates noncompete agreements, recognizes the need to protect a company\u2019s trade secrets and other confidential information. Typical enforcementoptions include alawsuit for damages as well as injunctive relief from the court to immediately stop severe damages fromviolation of the noncompete agreement (often referred to as a temporary restraining order).<\/p>\n\n\n\n In determining whether noncompete agreements will be in the best interests of the company, business owners should consider how a noncompete agreement may affect employee morale or loyalty, both as a result of the required execution of the agreement and the enforcement of the agreement. Suing an employee whohas quit or been fired might send the wrong message to current employees, even if the lawsuit is pursued for legitimate reasons.<\/p>\n\n\n\n Schedule a meeting to ensure that you are using the right document for your business protection needs and to navigate the applicable law in your local jurisdiction. We will help you craft a noncompetition agreement that will be upheld by a court and protect the legitimate business interests that you have worked so hard to build. Click the button below to schedule a consultation.<\/p>\n\n\n\nIssues to Consider when Requiring Employees or Contractors to Sign a Noncompete Agreement<\/h3>\n\n\n\n
Options Available to Enforce a Noncompete Agreement<\/h3>\n\n\n\n
Nonlegal Issues to Consider<\/h3>\n\n\n\n
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