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Non-competition Agreements and Their Enforcement
Non-competition agreements (or non-compete clauses if they are a part of a longer document) have become popular during the last decade. Company owners and top managements use non-competition agreements to protect their trade or technology secrets and information. If a working sphere is highly competitive, then an employer will most likely ask a potential employee to sign such an agreement as he does not want his leading employees to work for competitors. This essay will consider two major questions related to non-competes when the court may enforce them and how it will satisfy the interests that are at stake.
An employer may want to enforce a non-compete through the lawsuit at court if he cannot come to an agreement with his employees new boss. In such case, he wants to get a quick decision named a preliminary injunction. This decision will make the former employee and the new employer cease performing certain actions together like attracting customers, disclosing secret business information, and others. Before filing a suit, an employer should think thoroughly as, in most cases, whether he will get a preliminary injunction or not depends on a judges individual attitude to non-competes. Courts interpret these clauses with some suspicion, because of their anticompetitive nature and likely adverse effects on the employees further employment prospects (qtd. in Bishara 13). The judge will formulate his verdict based on the principles of honesty and credibility.
The court will recognize a non-competition agreement enforceable if it protects certain interests of an employer, defines reasonable time and scope of services that an employee must not render to a competitor, and comports with the public interests.
It secures two main employers rights: privacy for trade secrets and confidential information as well as his relationship with customers, vendors and clients (good will).
An employer creates individual forms of non-competition agreement for each working position. However, when the judge confirms that no protectable rights are at stake and there are no reasonable restrictions, the court does not enforce the non-compete clause. An agreement of the discussed type may be considered invalid by the judge if the scope of the employers protected interests is too broad and a term of its validity is unreasonably long. A usual duration of a non-compete is one year, but in some business spheres, it makes six months. Speaking about the geographical area, when an employers customer contacts are limited by a certain area, a non-competition agreement should indicate this particular area as well (Shea n.p.).
Therefore, an employer can interfere with an employees working for a competitor only if good will or confidential information/ trade secrets are at stake. As it was mentioned earlier, the best way to resolve such interests is getting a preliminary injunction. Before offering a potential employee to sign a non-competition agreement, an employer should think whether his worker will have an access to confidential information or a possibility to work for a competitor causing harm to his companys interests. The practice shows that overusing of non-compete clauses can affect the employers right to make them enforceable when needed (Hansen n.p.).
In conclusion, giving an employee a non-competition agreement to sign is a serious step from the side of an employer. A careless attitude to this juridical document or clause and its recognition as unenforceable by the court may lead to the mentioned negative consequences for the employer. In order to resolve the interests of the company at stake, its lawyer should develop a non-compete taking into consideration all the recommendations and world juridical experience concerning non-competition agreements
Bishara, Norman D., Martin, Kenneth J., and Thomas Randall S. An Empirical Analysis of
Noncompetition Clauses and Other Restrictive Postemployment Covenants. Vanderbilt Law Review. January 2015. Web. 7 Aug. 2015
Hansen, Randall S. Dealing With Non-Compete Clauses and Agreements. Quintessential
Careers. n. d. Web. 7 Aug. 2015.
Shea, Robert M., and Scott Connolly J. Employee Noncompetition Agreements. Morse
Barnes-Brown Pendleton. May 2015. Web. 7 Aug. 2015