Should I Have My Employees Sign a Non-Compete Agreement?

Building a successful business requires you to invest tremendous amounts of time, energy, and money, often at great personal sacrifice. It is understandable, and even admirable, that you would wish to protect those investments in every way possible. For this reason, you may be considering having some or all of your employees sign a non-compete agreement so they cannot take what they have learned from your company and use it in competition against you for a period of time following the end of their employment with you. I am asked about non-compete agreements on a regular basis in my practice, and, as I tell my clients, the enforceability of such contracts depends on how they are structured and whether or not they are reasonable.

Non-Compete Agreements for All?

A non-compete agreement is designed to keep your employees from going to—or building—a competitor and using what you have taught them against you. However, a non-compete, in most cases, should only be used for key employees, such as those with greater access to your strategies, techniques, and ideas. For example, if you employ frontline staff whose main tasks are to run the register at the front of your store, asking them to sign a non-compete would probably not be reasonable or enforceable. On the other hand, if you have a sales manager who is privy to your company’s inner-workings and motivations, it is understandable that you would not want him or her to jump to a competitor.

Know Your Industry

Depending on your chosen market and area of service, non-competes may be relatively common or somewhat rare. If your competitors—especially those who have been in business longer than you—tend not to use them, in general, there may be a reason. If they do use non-competes, try to learn about the terms of their agreements, and consider making yours similar. News travels quickly throughout most industries, and if your non-compete is too strict, potential employees will learn about it, making it harder for you to attract top talent.

Be Fair and Reasonable

The enforceability of your non-compete agreement will be affected by how reasonable and appropriate it is. This means that blanket statements regarding time-frames and geographical areas are unlikely to hold up if and when they are challenged. Set time and distance limitations that are not greater than absolutely necessary to protect your justified business interests. Your agreement should also not make it impossible for your employees to make a living if they decide to leave your company. The goal should be to legitimately protect your company, not to punish someone for leaving.

A Naperville Business Lawyer Can Help

For professional assistance in developing a reasonable non-compete agreement that offers you the protection you deserve, contact one of our experienced Hoffman Estates business contract attorneys. We fully understand the applicable laws in Illinois, and are prepared to help you draft an agreement that is both fair to your employees and provides the security you need. Call 630-756-1160 today to schedule a confidential consultation at the Gierach Law Firm.

Sources:

Investopedia

Insperity.com

Entrepreneur