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Adding a non-compete for current employees

Your employees are a terrific asset. They can help you support a higher volume of client needs and they can help you with areas where you are weak.

Unfortunately, however, employees can also be a risk. No matter what you do, there will be a day when your employees leave your business. Before they leave, you need to make sure your business has the protection it needs if your former employee becomes a new risk.

Here’s what you should think about as you prepare a non-compete agreement for your current employees.

Thorough, but not too strict

The bottom line is that the courts do not want a non-compete to make your employees unable to get a job within the field. Your non-compete agreement should be clear and thorough so that your business has protection, but not so strict that your employee would have to leave the industry to get a new job.

As you consider what to include in your non-compete, you may want to incorporate limitations such as:

  • The time before employees can start their own similar business
  • Distance from the employees work site
  • The time before employees can work for a competitor
  • What information is strictly off-limits for employees to take with them (such as client contact information)

A thorough non-compete also shows that you are interested in protecting your company’s information and what information is most important to you. When your intent is clear in the non-compete agreement, it is easier for the court to uphold it if you need to go to court.

Talk before they sign

When you have a new employee, a non-compete can be part of the negotiation for the position. A future employee can decide to accept or decline the position depending on what is in the non-compete.

For current employees, however, the process is different. Current employees have already agreed to their current working conditions, and a non-compete changes those conditions. If you are going to ask current workers to sign a non-compete, there must be new consideration, such as:

  • Bonuses
  • More desirable hours
  • Extra vacation time
  • Increased pay

Since non-compete agreements are common, they can get confused with paperwork that is simply on file. A non-compete is an important part of the employer-employee negotiations. New York lawmakers are currently considering a provision that would require employees to have 30 days to consider any new non-compete agreement. You and your employees need to discuss the non-compete agreement just as you would their compensation package.

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