Noncompete agreements can be effective tools that protect proprietary business information by restricting employees’ actions if they leave the company.
However, these contracts can be controversial, and there are some mistakes people make regarding noncompete agreements.
Unfairly restricting workers
To protect their business, employers might be too restrictive in their noncompetes. Some examples of what this over-reaching might look like include:
- Restricting workers indefinitely
- Casting too wide of a geographical net
- Being too broad with provisions involving protected information
- Other terms that create an undue hardship on the employee
Courts typically do not enforce these types of clauses or agreements. Thus, specificity and reasonableness will be critical elements of enforceable noncompetes.
Overuse by employers
Noncompete agreements can be essential tools in protecting business interests. They can prevent a former worker from taking valuable proprietary information about it and using it to compete with them by working at a competing business or starting a new one.
However, too many employers rely too much on noncompetes. Some might require all workers to sign them, even when they have no secret knowledge or specialized skills.
Under these circumstances, employees may have grounds to contest the agreement.
Signing without understanding the terms
Employers may well be familiar with noncompete clauses and other employment agreements. However, job candidates and employees typically do not have the same understanding of what they mean and how these contracts affect them.
And unfortunately, some employers do not inform workers of this clause, or they force the worker into signing without giving them the chance to meet with an attorney.
Avoiding these mistakes
In any of these situations, noncompete agreements can be subject to challenge. Ultimately, the courts could set them aside, meaning they will not enforce them. These situations can be costly and time-consuming.
Thus, to avoid these mistakes and the legal complications they can cause, employers would be wise to review their agreements – and whether there is a need for them – carefully before presenting noncompetes to a worker.
If a worker has signed a noncompete agreement already or is in a position where an employer requests that they sign one, individuals should know they have the right to review the contract carefully and protect their rights.