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What makes noncompete agreements enforceable?

On Behalf of | Jun 24, 2020 | Business

People that you employ may have access to your sensitive business information, like your sales data or your client list. To prevent your employees from using your information to compete against you, you may have them sign a noncompete agreement. A noncompete may bring you peace of mind, but you could have cause to worry if a judge decides not to enforce your agreement. 

While a judge will likely understand your need to prevent an employee from unfairly competing against you, a judge will probably not allow you to severely restrict the job prospects of your employees. Chron explains how you may make your noncompete agreements fairer and more enforceable. 

Restrict geographic reach 

An enforceable noncompete agreement will generally restrict the geographic area it applies in. Your company may not reach beyond a certain metro area, so it makes sense for your employee to work for a competitor in a city or state where your company has little to no market presence. In the event your company serves the global market, you might try to extend your noncompete to include everywhere, but a judge could rule that provision as too restrictive. 

Add a time limit 

A judge may also have problems with your noncompete agreement if it binds your employees from working for a competitor for all time. Business owners generally place a termination date in their noncompete agreements, allowing employees to work for a competitor after a span of time, such as a couple of years. 

Be as specific as possible 

Consider scrutinizing your noncompete agreement for language that is too broad. For instance, in restricting your employees, you may make it impossible for them to pursue their chosen careers. Your agreement may also leave the impression that your employees cannot work any place else or they will risk breaching your agreement. Your noncompete, while protecting your business interests, should not violate the rights of your workers.