Non-Compete Agreement Laws
A non-compete agreement is an agreement between an employer and employee stating that the employee will not compete with the employer after the employment is over. This agreement mainly aims at protecting the employer from the competition that the employee might bring after the end of the employment.
The employers use this agreement to protect their trade secrets and goodwill. An employee might learn the trade secrets of an employer and then decide to start a business using the acquired trade secrets or use the acquired good will to compete with the employer. This agreement becomes active after the end of employment because this is the time the employee ceases to be the employee of the particular employer.
When Are They Used?
For a non-compete agreement to be valid it must be supported by consideration. This means that the employee must get something in return for signing the agreement. When it is signed before employment, the employer is required to provide the employee with employment that will sustain him or her without having to engage in other things. In case the agreement is signed after being employed, the employer is required to promote the employee or add something else that was not included in the original employment agreement.
Why Use One?
Another condition of this agreement is that it must protect a legitimate business interest of the employer. This means that the agreement should be legal only if when the employee starts competing with the employer or working for the competition the employer will lose something of value. The court is responsible for determining whether the employer legitimate business interests will be affected by the employer starts competing with the employer.
Does It Apply Worldwide?
The non-compete agreement should also be reasonable in scope, time and geography. Every agreement is unique depending on the services provided by the employer. The agreement should state the scope it covers and also the geographical area. If the employer provides services in a certain geographical area the agreement can bar the employee from operating within that particular area but be free to operate in other areas beyond the stated area. The time scope states the period of time when the employee should not engage in the stated business. All these factors need to be reasonable and court plays a big role in determining these factors.
The non-compete agreement can be signed by almost any employee.
Foreign Employees
While hiring foreign employees one might require that they sign this kind of agreement. This is helpful because some of the foreign employees might learn trade secrets and gain goodwill from working for a certain employer.
When hiring foreign employees especially the one with special skills one needs to decide whether to make the employees sign the agreement. Therefore, a non-compete agreement is an important instrument for protecting employers from the challenges that they might face when the employees stop working for them.
When hiring foreign employees especially the one with special skills one needs to decide whether to make the employees sign the agreement. Therefore, a non-compete agreement is an important instrument for protecting employers from the challenges that they might face when the employees stop working for them.