3 elements of an effective noncompetition agreement

On Behalf of | Mar 26, 2022 | Employment |

Employees come and go for many reasons. As a company owner, you want to ensure ex-employees do not participate in activities that damage your business.

Noncompetition agreements are an effective tool that details the restrictions on employment ex-employees may seek. The contract must include specific information to be effective.

1. Time

A noncompetition agreement prevents employees from working with competitors, but you cannot require it indefinitely. People must still support themselves through long-term work. As such, you have to declare the maximum time a person must stay away from those companies. Massachusetts’ employment law allows no longer than six months to two years.

2. Location

Depending on the scope of your business, you must decide how large of an area your agreement covers. One way to determine this is to think about the location of your clients. Are most customers within your city, state or nationwide? Make the contract enforceable within an area that encompasses most of your business dealings.

3. Job Position

Your noncompetition agreement should include restrictions on the job position or industry of the former employee. You may prohibit them from working in the same or similar industry and holding a comparable position to the one they had during your company’s employ. However, people can obtain a similar job in a different industry since that company’s clientele is most likely unrelated to yours.

Noncompetition agreements are enforceable if you outline all the requirements in detail without overreaching. Creating a sound contract is an excellent way to protect your business interests.