Non-compete agreements aren’t always looked at in the best light. If you’re being asked to sign one, you may feel a little uneasy — as if you’re signing something you don’t completely understand and may not be in your best interests. If you’re the one asking for a non-compete agreement, you may not enjoy having to ask. At the same time, you know it’s necessary for your situation to protect your company and prevent key employees from working for competitors.
While we understand your hesitation, we are here to tell you that non-competes can be beneficial under the right circumstances. That said, make sure you know what you agree to before you sign one or ask an employee to sign one.
What Is a Non-Compete Agreement?
A non-compete agreement is a legal contract, usually drafted between an employer and an employee or two businesses at the start of their business relationship, that limits or prevents one party from engaging in certain competitive activities in a similar profession after the business relationship ends. In other words, a business might turn to a non-compete agreement to keep former employees from sharing trade secrets or using their skills and knowledge to work for or start a competing company.
When drafted properly, a non-compete agreement has many advantages:
- Protecting trade secrets and intellectual property
- Preventing unfair competition from former employees
- Limiting the chance of losing customers when an employee leaves
- Clarifying what is expected during and after the business relationship
- Reducing employee turnover
Are there disadvantages to non-compete agreements?
Before you sign a non-compete agreement or ask your employee to sign one, ensure you understand what you are agreeing to. The courts only look at non-competes as valid contracts if they are properly drafted and meet the Texas Business and Commerce Code requirements. A few disadvantages to consider include the following:
- Potential employees may be discouraged from applying with someone who needs a non-compete
- The language must be reasonable in the length of time and scope, including the type of work and geographic region
- They can be expensive to enforce
- The risk for litigation can be high
When drafted properly, non-compete agreements protect the employer and the employee. The right language in the contract can ensure that both parties are clear on what is expected of them during the period of employment and after the employment relationship has been terminated. Christman Attorneys, PLLC, has extensive experience drafting, reviewing, revising, enforcing, and/or defending non-compete/non-competition agreements for all types of employment relationships.
Contact us and let us explain all these details to meet your specific needs.
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Please consult an attorney for advice about your individual situation. The material on this website and in this or any blog article we publish are for informational purposes only. And do not constitute legal advice. The attorneys at Christman Attorneys PLLC, believe in tailoring legal advice and solutions to your own personal circumstances.
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