A non-compete agreement is a contract that involves two parties – an employer and an employee. In a non-compete agreement, the employee agrees to not enter into a competition with the employer after the employment agreement between both parties has been terminated. Non-compete agreements are also called non-compete clauses (NCC), and they are a legal agreement in which an employee agrees to never enter into competitive market/Profession with the employer.
The Importance of a Non-compete Agreement
The importance of a non-compete agreement cannot be overemphasized as it is used when the employment between an employer and an employee has been terminated, and the employee wishes to avoid competition against them in a similar market or profession. The most subjected parties to this agreement are consultants and independent contractors after their contract has been terminated. Also, in order to protect themselves against previous employees, employers may seek the non-compete agreement. This protects employers from former employees revealing confidential or/and sensitive information about the business of the employer, their operations, clients, customers, methods, evaluating, tactic, salary, approaches and practices, ideas, future intended products, or/and marketing plans.
What is the legal Validity of a Non-compete Agreement?
When it comes to the legal Validity of a non-compete agreement, the answer is never simple. There are also issues with regards to whether the non-compete agreements are legally binding. The answer to this question varies with respect to the case in question and the law of the state, and this includes the flexibility and how restrictive the agreement will be, how much it may limit someone from working in their field or in a particular location. A non-compete agreement can be considered as legally binding when the agreement has reasonable limitations, such as a clear and realistic region where the employee may or may not be eligible to work or a particular amount of before an employee may commence work in a particular field again.
How long is the Validity of a Non-compete Agreement?
A non-compete agreement becomes effective the moment it is signed, over a particular duration of time with a lot of factors in play. Meanwhile, before going into this agreement, it is very crucial to determine the exact dates in advance and seek legal counsel for guidance. Employers are only allowed to set their non-disclosure agreement within a realistic timeline without permanently preventing the employee from further working in their field. Before a non-compete agreement can be said to be complete, it must be fair to both parties and contain the following information;
- An accurate date to which the agreement will begin and end.
- The reason for passing the agreement and the terms it may come with.
- Realistic timeline during which the employee will be barred from working in the market and the location covered by the agreement.
- And finally, details as to how to the previous employee will be compensated for agreeing to the terms.
These are the information that makes a non-compete legally binding. A non-compete agreement may sometimes also be used to retain valuable employees and keep confidential information safe. Before agreeing to a non-compete agreement, it is important to take some time and seek legal counseling as it is a very sensitive issue and varies from place to place or from location to location.
Also, when presenting a non-compete agreement to an employee, ensure it is complete and can be enforced as most employers don’t know that their non-compete agreement lacks some key features, making it almost useless and not enforceable. It is advised to use non-compete agreement samples before drafting one. Breaking this agreement can lead to legal consequences which may not be of benefit to you or your career, so it is important to take your time before putting your pen on it.