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What every company should include in a non-compete agreement

Losing a valuable employee is always tough for a business owner. You relied on your employee’s expertise, and now you must start over with someone new. If you are lucky, you had the foresight to have your employee sign a non-compete agreement. However, for many small business owners, this might not have been on your radar. Now you are wishing you had taken the time to create one.

Your company may never have used non-compete agreements. Or maybe you are unsure if an agreement you created is legal. Either way, here is some information you should consider including in your next employee’s non-compete agreement.

Be reasonable

One of the biggest problems courts have with non-compete agreements is that the agreements are excessive. It is reasonable to want to protect your company, but it is unreasonable to ask your employee to not work for a competitor for 10 years. Generally, an agreement will stipulate employees cannot work for a competitor for about two years. If the employee is an executive, you may be able to bind him or her for slightly longer.

Include specific language that protects your company’s interests

An employee may have access to company secrets like a special recipe or confidential marketing tactics. Make sure your non-compete states that a former employee cannot reveal such proprietary information. If your employee worked with your customers, stipulate that the employee cannot persuade these customers to follow him or her. Maybe you provided a type of special training for you employee. You may want to state that the employee cannot use this training to compete against your company in his or her next role.

Outline what jurisdiction the agreement applies to

Different states have different laws governing non-compete agreements. Some states may not enforce non-compete agreements that are signed after employment begins. You may want to include some language that states the agreement is valid in Florida, and any legal action regarding the agreement will also be heard in a Florida court. You also want to keep the scope of the geographic area for the non-compete limited because including the whole country may be deemed unreasonable by the court.

Creating a non-compete agreement that stands up in court is no easy task. If you are truly concerned about protecting your company, you may consider reaching out an experienced business law attorney. An attorney can help you create a legally-binding document that will protect your company’s future interests.

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