non Compete agreement

What is a Non-Compete Agreement?

Employment contracts are complicated. They are full of intricacies and legal jargon that can be difficult for a layperson to understand.

Under the umbrella of employment contracts, there is something called non-compete agreements. A non-compete agreement is a legal document between an employer and an employee that governs the professional relationships, boundaries, and standards between them.

In this article, we’re going to cover the basics of non-compete agreements. By the end of this short guide, you should understand more about what they are and why they are important.

What is a Non-Compete Agreement?

Non-compete agreements are legally binding and are in place to protect employers. Under such agreements, employees are bound by limitations that prevent them from engaging in activities that go against the employer’s best interests.

In simpler terms, a non-compete agreement will prevent an employee from being able to start a business that competes with their employer’s business while working for them. It also prevents an employee from liaising with competitor businesses or soliciting the company’s clients outside of the workplace.

Employers often ask their employees to sign non-compete agreements for confidentiality reasons. Under a non-compete agreement, an employee might be prohibited from talking about the company’s secrets or sharing confidential client information.

Often, the terms of a non-compete agreement can continue after an employee’s contract has been terminated. However, a non-compete agreement’s exact terms, conditions, and duration can vary.

Common Components of a Non-Compete Agreement

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Non-compete agreements can vary depending on the employer’s preferences and state employment and labor laws. However, there are some key components that pretty much every non-compete agreement contains, including:

  • Duration – a non-compete agreement will clearly state the length of time that an employee must uphold the terms and conditions of the agreement. It may also include details about the geographical areas that the agreement covers.
  • Restrictions and Prohibitions – the non-compete agreement must always state what activities the employer is prohibited from undertaking while they are under the agreement (such as the employee can’t share company information or start a side hustle that directly competes with the employer’s business).
  • Business interests – non-compete agreements often state the unique interests of the business involved and details about what the employer wants to protect (such as client information, customer relationships, or trade secrets).

Learning More About Non-Compete Agreements with an Employment Lawyer

If you still need legal guidance on non-compete agreements after reading through the information we’ve covered in this article, you might benefit from speaking to an employment lawyer.

Get in touch with an expert employment lawyer at HKM for advice on how to formulate a non-compete agreement for your employees to sign or enhance your existing agreements and contracts.

Your employment lawyer can help with drafting non-compete agreements, ensuring they contain everything needed to protect you and your business. They can also read through your agreements to ensure they are free of errors and loopholes and offer advice on legal action to take if an existing or former employee causes criminal damage.

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