Non-compete templates

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You will be able to modify it. A Non-Compete Agreement is a document used to protect employers from partners, employees, contractors, and other individuals with access to their business secrets and practices using that access to leave the company to start their own competing business in the same industry. Non-Compete Agreements are used most often in highly competitive industries, such as technology development, sales, and marketing.

The Agreement is generally entered into at the end of a business relationship, but can also be created at the start of a business relationship as a condition of employment. In exchange for entering into the Agreement, the non-competing party must receive some form of compensation, known as consideration.

Consideration can be either a promise of employment or monetary compensation to be paid from the protected party to the non-competing party. This Agreement outlines the duration of the non-competition, the geographic location where the non-competing party must avoid competition, and the covered subjects, industries, and activities that the non-competing party must not engage in while the Agreement is in force.

This Agreement also offers optional clauses that would prohibit the non-competing party from behavior such as soliciting the protected party's customers and clients or inducing current employees of the protected party to leave their jobs and come work for the non-competing party.

The agreement also has a specific location that would be covered under its ambit. Say, for example, if the agreement is signed in Florida, then the obligations under the agreement may be applicable for that very region only. That is, the 2nd party or employee is free to compete in any other region.

Jurisdiction is another important part of the enforceability of the agreement. That is, in case of the breach of the agreement, judicial authorities of which region would be reached first by the aggrieved party.

Taking the example of New York again, we would say that the jurisdiction of such an agreement would be New York County Supreme Court and other lower judicial authorities in the state. The amount of compensation in case of breach of the contract to be provided by the 2nd party Employee is also a part of the working of the agreement. Further, it also provides for how compensation would be provided to the aggrieved party.

In case the agreement is signed for an employing company that is a part of a group and employs, the employment agreement does not need to be applicable for all firms. That is, the agreement can apply to the firm employing the employee in actuality and providing for the salary.

It would not be applicable for the other firms of the group generally. However, as a special clause or extension, this can be made possible. Provided if both parties agree. Benefits of Non-Compete Agreement The non-compete agreement comes with its own sets of benefits for party 1, that is, the employee. That is, it prevents the exploitation of employers by safeguarding trade secrets.

Another benefit of the agreement for the employer is that it incentivizes providing specialized training to the employer as the agreement comes with an obligation period which can sync with a minimum service period post-training for the employees. The agreement also prevents unfair competition, which ultimately has an effect on the consumers in the market. Drawbacks of Non-Compete Agreement Along with its benefits which are in favor of the employer as per the nature of the agreement , the non-compete agreement carries some drawbacks.

Further, it reduces the scope of exploration of opportunities for them. There are crucial clauses necessary in some non-competes that will not be relevant for others. Examples of company-specific content in a non-compete, possibly not addressed by templates, include:.

Your company will have its own special needs in a non-compete agreement. An experienced attorney will be sure to include all necessary content. Using a free or low-cost template may be tempting as a cost-saving measure. However, in the long run, the use of a template may cost a company substantial money and time and harm the business. Hiring an attorney as the first step means that the non-compete will be created correctly from the outset.

If the agreement later needs to be changed or updated, the company can re-engage the attorney to address those needs. There will be an attorney-client relationship already in place. This relationship will also prove valuable for companies needing legal advice dealing with other issues, such as what to do if an employee will not sign a non-compete.

If a contract is invalid it may be challenged in court, which can lead to expensive court costs and attorney fees. If your non-compete is deemed unenforceable, a former employee may hurt your interests by poaching your clients or taking the expertise they gained from your training to a competitor. And if you try to enforce an agreement that is later declared invalid, your employee may even be able to get damages from you by claiming you wrongfully interfered with their employment prospects.

Even if you are a small company, consider consulting a lawyer. A lawyer can assess the need for a non-compete and explain how it will protect your business. In some states like California, non-competes are illegal and have no legal effect. Although they can be used in places like Oklahoma and North Dakota, they cannot be enforced.

Also, Hawaii hi-tech companies are banned from using non-competes while such agreements are only limited to 1 year in places like Utah. If legally recognized under your legal jurisdiction, having a non-compete agreement grants you a certain amount of leverage over specific employment activities of past or present employees. These are activities that may fundamentally hurt your business growth or expansion or reduce market share if left uncontrolled.

The last thing you need in competitive markets is a former employee entering into competition with you and possessing insider knowledge of your business differentiation and strategy.

It also helps to reduce high employee turnover. You may also want to consider relying on arbitration as the applicable dispute resolute mechanism. Though this is not a guarantee of enforcement in unfriendly jurisdictions, an arbitration clause will expressly contain the mandatory and applicable forum and exclusive governing law and state of jurisdiction. A well-drafted arbitration clause with express and defensible provisions for the choice of law and venue and emergency injunctive relief can be that much needed legal edge.

A non-compete agreement is a legal document that requires legal expertise in its drafting and execution. So writing it all by yourself can be quite a daunting task. Remember that you also need to study your market, major competitors, and business directly or indirectly competing with your business. And you need to anticipate any possible future conflict of interest and forestall the resulting business threats in the short term.