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What should you include in non-compete agreements?

Running a business of any size is an incredible undertaking. Not only will you need to worry about how to make your business a success, you will also need to organize and manage your workforce. These two priorities can clash at a certain point, and unless you take steps to protect your business, your employees could ultimately jeopardize its future.

Having your employees sign non-compete agreements can be a very effective way to avoid this clash. These contracts can be valuable tools, as long as you utilize them properly and ensure they are enforceable.

To be effective, your non-compete agreement should:

  • Include specific directions on limitations for future employment (e.g., the location, industry and duration from which the employee is restricted from working)
  • Be required of employees who have access to protected information
  • Not be overly restrictive
  • Be clear and understood by the employee

To be enforceable, your non-compete agreement should:

  • Be properly drafted with the help of an attorney
  • Protect legitimate business interests
  • Be reasonable in the limits it sets
  • Be signed by the employee
  • Provide a benefit to the employee

If you have an effective and enforceable non-compete agreement in place, you can expect that your employees will not leave to work for your competitor or go to a competitor with trade secrets and other confidential information.

Unfortunately, there are situations in which a former employee will breach a non-compete agreement. Under these circumstances, it can be critical that business owners consult an attorney as soon as possible to examine the legal options available. In many cases, compensation can be awarded to cover any damages suffered as a result of the breach.

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