Business owners strive to build a successful business brand highly regarded for delivering quality items or services. To safeguard all this hard work, a non-compete agreement comes in handy. Therefore, employers can recruit talented workers without fear that those workers might use the skills, experience and information obtained during their time of employment to compete with the employer in the business environment.
Non-compete agreement defined
A non-compete agreement bars a member of staff from directly entering into competition with their boss in the same profession or business for a reasonable duration of time and within practical geographical limits. This agreement can be a standalone agreement or a provision within a wider contractual employment contract. A person will be in violation of a non-compete agreement if they took up an employment opportunity at the only textile manufacturing company in their state, learnt and gained experience while there, then quit his or her job and attempt to start their own textile business across the street.
Reasonable in scope
A number of legal considerations ought to be factored in when drafting a non-compete agreement for any business, especially how logical or sensible the non-compete contract is. This is not a contract that can be drawn up simply in any manner, and that's why a business lawyer with experience in writing and implementing non-compete agreements should be hired by a business owner. In legal contracts, explicit wording is vital, and non-compete contracts are no exemption.
- Genuine business interest
For a non-compete agreement to be reasonable in scope, it must be seen to protect a genuine business interest. For example, it cannot be used to bar an employee from taking up another job that might enable direct or indirect competition. A legitimate agreement can stipulate that an employee is prohibited from using a specific product recipe or formula in their personal undertakings or for generic business rivals. The business interest should be defined by law in order to be considered valid.
2. Legal time frame
Another criterion for a non-compete agreement to be considered valid is if the agreement is practical in the time in which it is enforceable as well as the geographical area in which it is to be implemented. Courts tend to accept at least 2 years as reasonable enforceable time although there's no definite legal time frame. On the other hand, courts restrict non-compete agreements to a geographical boundary where the business owner actually operates.
A business lawyer can help business owners protect and grow their business brands by drafting for them valid non-compete agreements that all employers are expected to sign and uphold.