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Limitations in non-compete agreements

Employers in Minnesota and throughout the country may ask employees to sign a non-compete disclosure as part of the hiring process. These agreements restrict employees from engaging in business with the company’s competition, as reported by the U.S. Department of Treasury. The terms of the document often prohibit employees from disclosing private company information to a competitive source, going to work for a competitive company or starting a new company that directly competes with the employer. While a company cannot force an employee or potential employee to sign a non-compete agreement, employers can choose to not hire someone who does not want to sign the document. There are some limitations, however, in the enforcement of these agreements.

According to Forbes, non-compete agreements should have reasonable terms and must include specific details regarding the information that cannot be shared with others. A Chicago staffing firm lost a lawsuit that they brought against several former employees. Although the company alleged that the employees disclosed sensitive information to its competition, the judge presiding over the case determined that the terms in the non-compete agreement did not cover the information that the employees shared.

In a non-compete document the employer should specify a time-period and geographic area in which the agreement covers. For example, the terms of the agreement may restrict an employee from working for a competitive company within state boundaries. However, the employee may be able to work for a company within the same industry that is located in another state. These terms are often taken into consideration if someone should encounter a lawsuit. 

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