Non-Compete Agreements: A Necessity For Your Business

Written by: Natalie Klyashtorny

In these trying economic times, business owners should act proactively to protect their competitive advantage.

Every business possesses a proprietary interest in its client base, which typically takes years to develop, and in its unique business plans, methods and intellectual property. To protect that interest, when hiring a new professional employee, a business should require the employee to sign an employment agreement which contains a confidentiality clause, prohibiting disclosure of confidential business information, as well as a non-compete/non-solicitation clause, detailing restrictions upon the ability of the employee to compete with the business, hire its other employees, and contact and solicit its customers in the event that the employment relationship ends.

If such an agreement is not entered into when an employee is initially hired, an employer can still include the aforementioned provisions in a severance agreement. However, under no circumstances should a business allow an employee to leave without these protective measures in place. If a former employee is not so restricted, that employee could utilize the knowledge, information and unique skills that the employee acquired at the business to compete with the business by soliciting its clients and employees. In that case, if the former employee is not bound by some kind of non-compete/non-solicitation clause, the business would likely not have legal recourse against the former employee and could see its competitive advantage erode.