Are you looking to get a new job, or are you thinking about leaving your current job to start your own business? If either of these is the case, you might be wondering if there are any legal red flags for you. Non-compete agreements can be one of those red flags. These contracts restrict an employee or potential future employee from working with a competitor or starting their own business in the same field. In other words: They prevent someone from going into competition with their current or former employer. If that sounds like something that would not work in your favor, you’re probably right. Non-compete agreements are generally frowned upon by businesses, and courts will not enforce them unless they are necessary to protect a company’s interests and cannot be reasonably replaced by another type of agreement such as a non-disclosure agreement (which we’ll talk about later). But before we tell you whether non-competes are something to worry about, let’s first take a look at what they mean and why companies use them.
What Are Non-Compete Agreements?
Non-compete agreements between companies are contracts that business owners use to protect their interests and investments. Companies generally seek these types of agreements from managers, key employees, IT staff, and other individuals who have access to sensitive information like trade secrets or customer data. They also use non-compete agreements when they want to prevent their employees from going into direct competition against them after they leave the company. While this type of agreement is not uncommon, it is not always legal.
Why Employers Use Non-Compete Agreements
Although non-compete agreements can be difficult for employees to sign and can have a negative impact on your career, there are a few reasons why employers are interested in using them. Let’s take a look at a few. First, non-compete agreements help companies protect their interests when it comes to trade secrets. Trade secrets are what they sound like: secret details of a company’s production and operations. Companies protect trade secrets with non-disclosure agreements, but they can add a non-compete agreement to the contract to protect trade secrets further by making it illegal for employees to work with a company that has similar operations. Second, non-compete agreements can help employers protect their customers. This could be anything from a company’s customer list to its trade secrets, depending on the agreement.
When You Should Be Concerned About a Non-Compete Agreement
Before we determine whether or not you should be concerned about a non-compete agreement, let’s look at situations where these agreements are generally enforceable. Employers generally have to prove that you had access to sensitive information and that the company has a legitimate reason for the agreement. You might also be required to sign an agreement when you are first hired. But here are a few situations where you might want to be particularly careful about non-compete agreements. – If you are a manager, director, or similar position. Managers have access to sensitive information, so companies often require them to sign non-competes as a condition of employment. – If you are leaving an employer with whom you have a particularly close relationship. For example, if you were an executive at a company, left the company, and then wanted to go work for a competitor.
As we’ve seen, non-compete agreements are contracts that businesses use to protect their interests and investments. Companies generally seek these types of agreements from managers, key employees, IT staff, and other individuals who have access to sensitive information like trade secrets or customer data. Although non-compete agreements can be difficult for employees to sign and can have a negative impact on your career, there are a few reasons why employers are interested in using them. In certain situations, non-compete agreements are generally enforceable. However, you might want to be particularly careful about non-compete agreements if you are a manager, director, or have access to sensitive information.