A Non-Compete agreement is a legal-binding document in which an employee agrees that if they leave the company they will not seek employment at a competitor for a certain number of months afterwards. This protects the organization from a disgruntled employee who may bring confidential information to their new career.
Any employee who signs a Non-Solicitation document – agree they will not try to solicit clients or employees from their previous company. Like a Non-Compete agreement this usually lasts between 6 months and a year.
When preparing these files it’s important that a company seeks legal counsel. Each state has different laws surrounding both agreements – a lawyer will help you draw up these documents that can be enforced by law should an employee ever break them. The last thing a company wants is to have their employees sign legal binding documents that they cannot implement later on.
When drafting up these types of documents your lawyer will most likely know the local laws surrounding the Non-Compete and Non-Solicitation documents but It’s always important to do your own research. In some states Non-Competes are banned all together. For instance, California does not enforce Non-Competes including independent contractors. This is the same for states like North Dakota and Oklahoma. Unlike Non-Compete documents – all 50 states enforce Non-Solicitation agreements to some degree. For instance, California only enforce Non-Solicitation agreements regarding trade secrets.
It is also important to note that Non-Solicitation and Non-Compete agreements may not solve all of a company’s problems. According to a MacElree Harvey, Ltd. article The Top 10 Mistakes with Non-Competition Agreements, “while Non-Competes can be immensely valuable, they are not a cure-all. It is a mistake to think that such an agreement is the only thing that is required to retain valuable employees or protect your business’ confidential information.” The article adds, “it is important not to think of a Non-Compete as a silver bullet or cure-all, but rather as one more tool in the toolbox. Such a tool, when used properly, can be of tremendous value to a business.”
When it comes to preparing a Non-Solicitation agreement, there are important things to note. According to Upcouncil, “the agreement is supposed to stop employees from using insider knowledge to poach customers or pressure other employees into joining them.” If an employee goes on their own free will or without knowledge of the former employee who is under contract – a Non-Solicitation is not enforceable.
Other reasons that Upcouncil feels Non-Solicitation agreements are struck down in court are; the agreement is too broad; too generalized; the document has poor wording, or the agreement has the wrong job description. Yes -Upcouncil recommends having an employee sign a new Non-Solicitation agreement with each promotion or job change.
When preparing your Non-Compete and Non-Solicitation agreements it’s important that you pay very close attention to detail and follow the laws of the state your employee lives in. When it doubt – consult legal counsel. They will make sure if you ever have to enforce these agreements – they will hold up in court.
