The Importance of Non-compete and Non-solicitation Provisions in Your Employment Agreements

If you are going to have your employees sign employment agreements, then you should assess whether to ensure that those agreements include non-compete and non-solicitation provisions. A non-compete provision prohibits the employee from entering into a business that is competitive with yours for some period of time after the termination of their employment with your business. A non-solicitation provision prohibits the employee from soliciting away employees, clients, customers, and vendors of your business for some period of time after the termination of their employment with your business.

These provisions generally go hand in hand with respect to protecting your business interests should an employee, particularly one with access to critical company information, leave. And the threat that a departing employee might enter into the same business as yours and contact your clients, vendors, and current employees to assist them with starting their own venture is real. I see it on a regular basis. Without a previously existing legal obligation not to engage in that activity, there is little to nothing that you can do to prohibit that behavior unless you are willing to bring a lawsuit and hope that a court agrees that the conduct of the exiting employee rises to the level of something like tortious interference with business relations or some similar claim. While these provisions must be very carefully drafted and the courts will not sanction unreasonable limitations, for the most part, these provisions will be found enforceable and it is much cheaper and substantially less stressful to ensure that you have covered these bases sooner rather than later.

This blog post is not intended to consist of legal advice and you should always consult with a lawyer before acting on anything you find on the Internet.  If you have questions or comments about this post, about the topic, or if you need legal assistance, you should feel free to give us a call or send us an email.  

The Importance of Well Drafted Employment Agreements

Not every business is of the type that requires contracts with employees, particularly businesses that have high employee turnover, but, otherwise, most business owners should seriously consider whether to enter into employment agreements with their employees.  Some of the reasons for doing so are to

• clearly define the employee’s job and your expectations;
• clearly set out compensation;
• clearly set out other benefits and vacation;
• clearly set out whether the employment is at will or for a specified term;
• clearly set out codes of conduct and bases for termination of employment;
• limit the employee’s ability to compete with your business should they leave;
• limit the employee’s ability to steal your clients, customers, other employees, or vendors should they leave; and
• have the employee provide certain assurances and promises as to competence, loyalty, professionalism, and confidentiality, among others.

A well-drafted employment agreement addressing the foregoing points will go far to protect you and your business and to avoid costly litigation.  While you may be tempted to prepare a document like this in house without the advice of a lawyer, it is very important to work closely with a competent professional who can carefully craft an employment agreement that will work for you and your business.

This blog post is not intended to consist of legal advice and you should always consult with a lawyer before acting on anything you find on the Internet.  If you have questions or comments about this post, about the topic, or if you need legal assistance, you should feel free to give us a call or send us an email.