Business owners turn to non-compete agreements more frequently than ever before to protect their investment in the workforce and intellectual property. Although non-compete agreements are standard in many industries now, each state has its own regulations. As a result, there are some common mistakes that employers make which can render an agreement unenforceable.
There are a few things that can help protect the integrity of your company’s non-compete agreements.
Avoid overusing non-compete agreements
You might think that every employee in your business should sign a non-compete agreement, but that isn’t the case. Employees with no access to proprietary information or trade secrets are at less risk of exposing information or directly competing with the company. Those employees may not need to sign a non-compete agreement, or they may be able to sign a more lenient one.
Define the applicable area
Non-compete agreements must specify an applicable area or radius around the target market of the business. Agreements that are too broad are often deemed unenforceable by the court, so establish a valid radius and keep it reasonable.
Update agreements as job titles and duties change
A non-compete agreement typically contains language specific to the employee’s responsibilities and role. As job positions and duties change, such as with promotions, that can invalidate an agreement. Update non-compete agreements any time an employee’s position changes to ensure validity.
When your company invests in recruiting, training and advanced education, you need to protect your investment. Keep competitors from poaching and prevent employees from giving away company secrets with a comprehensive non-compete agreement that is specific and enforceable.