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Important aspects of a non-compete agreement

On Behalf of | Jul 15, 2022 | Business Law

When your company works with sensitive information, you have to ensure that your employees do not reveal anything. One way you can do this is by drafting a non-compete agreement.

There are several things you should consider as you put this document together.

Who needs to sign the agreement?

According to Business Law Today, you may not need a non-compete agreement for every employee. Different people could have access to different information. If you have a special manufacturing technique, for example, you may want a document protecting this process. Only the employees directly involved in the manufacturing process would need to sign the agreement. Company researchers could also sign the document. However, employees in financial and administrative positions likely do not need a non-compete agreement.

What are the terms of the agreement?

A non-compete agreement has to be enforceable in a court of law. Business News Daily says that you should write reasonable terms for the document. Without clearly-defined terms, a court may not recognize the validity of the agreement.

The document should clearly explain how long employees are subject to the agreement. Less than two years is a standard time frame. Additionally, it should specify the geographical area where the agreement is in force, as well as your main competitors. A former employee may move outside the state and do similar work for another company, for example. If your document restricts people from working for competitors in surrounding states for more than two years, a court may rule that it is too strict.

You could create several versions of your non-compete agreement. This allows you to tailor the terms depending on an employee’s access to confidential information.