What You Need To Know Before Signing a
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Non-competition agreements are commonly used when hiring new employees, especially in fields where knowledge or trade secrets can be easily transferred to a competitor. These documents are also known as “non-compete” or “non-compete agreements” and usually target specific employees who will have insider access to sensitive information. However, non-competition agreements also carry a lot of risk. In fact, they can be seen as a black mark on your company if your competitors find out you’re using them. They can also make it difficult for former employees to find future work if they are unable to get other offers because of their non-compete agreement. To mitigate the risks and protect yourself from legal challenges, it’s important that you know what you’re signing before you sign it. There are several things you should know about non-competition agreements before getting one:
What is a non-competition agreement?
A non-competition agreement is a contract between an employer and employee in which the employee agrees not to compete with their employer after leaving the company. Employers often include these in hiring contracts for high-level employees whose expertise and knowledge are critical to the company’s success. The basic aim of these agreements is to restrict an employee from working for a competitor or starting their own competing business for a set period of time after leaving their present company. Non-competition agreements are usually straightforward contracts that outline the terms of the agreement: what the employee agrees to, what the employer agrees to and the length of time it’s in effect.
Why do employers use non-competition agreements?
There are a few reasons employers use non-competition agreements. First, employers want to protect their investment in employees by making sure they don’t benefit their competitors after they leave the company. Second, they want to protect any sensitive information they’ve been privy to while working for the company. Third, employers may want to ensure that employees don’t open competing businesses that could steal away clients or profits. Finally, some employers may use non-competition agreements as a form of implied coercion, wherein they threaten employees with a lawsuit or other penalties if they leave the company and go to work for a competitor.
Which employees must be covered by a non-compete agreement?
Before you sign a non-competition agreement, it’s important to know which employees must be covered by the agreement. The type of employment and position within the company will determine whether or not you’re required to sign a non-competition agreement. Employers typically require senior-level employees – such as executives, managers, engineers, directors and other key personnel – to sign non-competition agreements. Employers may also require sales employees to sign non-competition agreements if they’re in a position to gain access to client lists or other sensitive information. In some cases, employers may even require lower-level employees to sign non-competition agreements.
Things to look out for in a Non-Compete Agreement
There are several things to look out for in a non-competition agreement, including the employer’s reason for requiring it, the duration and geographic area covered by the agreement and the type of activities prohibited. Employers should have a good reason for requiring non-competition agreements. This can be tricky if you’re asked to sign an agreement without any explanation. In most cases, the employer’s reason is related to protecting its interests or sensitive information. The duration of the agreement is important. Non-competition agreements should not be indefinite, but rather limited to a specific period of time, such as one year. The geographic area covered by the agreement is another factor to consider. Non-competition agreements should be specific to the region where the employee was employed, and they should not apply to the entire country. The type of activities prohibited by the agreement is the final thing to consider. Employers shouldn’t overreach by including too many activities that are unrelated to their business. For example, if you were an accountant for a company and signed a non-competition agreement that prohibited you from doing accounting work for competing companies for three years, it would be overreaching.
When does a non-compete agreement become void?
There are three ways a non-competition agreement becomes void. First, if the employer doesn’t enforce the agreement, you could argue that it’s no longer valid. Second, some states allow the agreement to become void if the employer doesn’t make the terms of the agreement clear upfront. Third, you could argue that the agreement is unenforceable based on the circumstances of your situation. In certain situations, judges will decide whether or not a non-competition agreement is valid. If your agreement is challenged in court, you’ll need to present a strong case for why the terms are fair. If you have a weak case or the judge doesn’t believe your agreement is valid, they’ll rule against you.
Before you sign a non-competition agreement, be sure to ask questions and understand the terms of the agreement. You should know the reason for the agreement, the type of activities prohibited, the duration of the agreement and the geographic area it covers. If you feel pressured into signing a non-competition agreement and don’t understand the terms, it might be a sign that the agreement is unfair and you should refuse to sign it. In some situations, judges will decide whether or not a non-competition agreement is valid. If your agreement is challenged in court, you’ll need to present a strong case for why the terms are fair. If you have a weak case or the judge doesn’t believe your agreement is valid, they’ll rule against you.