A non-compete agreement is a written document which is used to protect trade secrets and other valuable assets of the company. It also prohibits a former employee from working for his employer's competitors. Because of the fierce competition between companies today, employers are now more focused on retaining their employees and protecting valuable business information.
As an employer, you should not ignore the importance of making a non-compete agreement, especially if you have employees who are often required to use the company's trade secrets.
If important information is revealed to outside parties, other people may use it for their own advantage. In order to avoid being involved in this situation, it is advisable that you make a non-compete agreement with the help of a Los Angeles employment attorney.
Although making one is already prohibited in California, you can still stop your employees from revealing the company's trade secrets or working in rival companies once their employment ended by including a provision about it in their employment contract.
Making an Enforceable Non-Compete Agreement
In order for a non-compete agreement to be considered valid, you should consider the right of your employee to earn a living. The court may declare it illegal if it is unreasonable and if it violates your employee's rights.
If you want to make an effective and enforceable non-compete agreement or clause, it is advisable that you consider the following:
- Purpose- You should have a good reason for making a non-compete agreement. In addition, you must carefully choose who among your employees will be asked to sign it.
Once you have determined who among them will be covered by it, you should then think of the benefits that you can give them in exchange of their approval or signature.
- Effects- The non-compete agreement should not cause too much problems to the employee. If you are being unreasonable, the court may declare it invalid.
- Market- If the company is only within California and competing locally, you should not prohibit a former employee from working in companies that are already outside of the state. Make sure that the non-compete agreement will only stop him from working for employers who are your direct rivals or are engaged in a similar business. Remember, if the agreement prevents an employee from working in outside states, there is a high chance that the court will invalidate it.
A non-compete agreement will be effective if was made properly and if both parties benefited from it. If you have more questions regarding it, do not hesitate to acquire legal guidance from your Los Angeles Labor Attorney.