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What should be included in a non-compete contract?

Whether you are a business owner looking to protect your interests or a prospective new employee, you should know what to expect when looking at a non-compete agreement. The National Law Review states that employers can benefit from the documents in the following ways: 

  •        It discourages other companies from soliciting employees.
  •        It can prevent a valued worker from leaving for competition.
  •        It can keep employees from disclosing trade secrets.

However, businesses that are overzealous with the terms of the agreement may run into issues. The scope of the contract should be broad enough to keep a judge from determining it is unreasonable. For example, an employer can prohibit a worker from going to competition, but they should not list too many types of businesses as the competition.

Further, the time period outlined on the contract is important. Generally speaking, valid agreements usually place a time limit of six months to two years. Anything over that could be challenged in court as unreasonable.

Lastly, a business that has asked employees to sign a non-compete agreement will have to outline the geographical area in which competitors do business. Again, this is an area where businesses that get too restrictive can get into trouble. You should make sure that the area only includes the employer’s service area.

According to a report in Fortune magazine, employees can try to negotiate the contract by asking for a shortened timeframe. However, the response may be a resounding “No.” However, if the terms of the agreement are too restrictive and specific, a worker may have success challenging the document in court after leaving the company.

While this information may be useful, it should not be taken as legal advice.

 

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