Naperville Business Attorney Discusses the Basics of Non-Compete Agreements

non-compete, Naperville business law attorneyIf you are a business owner, you have probably poured a great deal of time, money, and effort into your business. You may be considering using a non-compete agreement to protect the tremendous personal and financial investments you have made through your business. As a business law attorney, I am often asked about non-compete or non-competition agreements (NCA), and I always explain that these contracts are only enforceable if they meet certain requirements. Read on to learn the components of an effective non-compete agreement and how this legal tool can help protect your business.

Purpose of a Non-Compete Agreement

Employers often ask employees to sign a non-compete agreement to prevent them from taking knowledge and skills learned from your business and use it in competition against you. Valid NCAs only last for a specified a period of time following an employee’s termination or resignation.

Select Only Key Employees

A non-compete agreement can help prevent employees from spreading business information to competitors or becoming a competitor themselves. Ideally, NCAs should only be used for higher-level employees, including those with access to sensitive information or ideas. Requiring relatively low-ranking staff members like cashiers or sales associates to sign such an agreement is not usually necessary or advisable.

Research What Other Businesses in Your Field Are Doing

The frequency of non-competition agreements varies significantly depending on what type of industry you are in. Find out if other companies in your field and geographical area are using non-compete agreements. If your competitors are all using them, this may be a reason to consider using one yourself. If almost no other businesses similar to yours are using this legal tool, there may be a reason why.

Be Impartial and Rational

The enforceability of your NCA is affected by many factors. A non-compete must be reasonable in its requirements and scope. If you choose to use a non-compete, make sure rules regarding geographical areas and timeframes are specific and equitable. Non-competition agreements which are too ambitious may not hold up if they are challenged. Only establish time and distance constraints that are necessary to protect your business interests. The more precise and detailed your non-compete terms are, the more likely the NCA will be understood and enforced. It is important to note that the purpose of a non-compete agreement should never be to punish employees for leaving a company. An overly-restrictive non-compete agreement can give your business a reputation of being uncooperative and uncaring about your employees.

Help with Illinois Business Contracts

For proficient support in building a legally-enforceable non-compete agreement, contact a qualified Naperville business contract attorney. Call 630-756-1160 to schedule a confidential consultation at The Gierach Law Firm today.

 

Sources:

Insperity

Entrepreneur