Why are Non-Compete Contracts Important?

Non-Compete ContractsNon-Compete Contracts

Signing a non-compete contract is a fairly common part of the onboarding process for companies. This is especially true when an employee deals with confidential or sensitive information. Statistics show that about a third of employees have a non-compete agreement with their current employer. Certain industries tend to have non-compete contracts at higher rates based on how important it is to protect proprietary information.

The primary purpose of a non-compete contract is to prevent an employee from leaving their current job and going on to work for a competitor. It doesn’t stop someone from leaving a job, but it does limit what they can do once they are gone, at least to some degree.

Non-compete contracts aren’t intended to penalize employees. In fact, in addition to protecting proprietary information, they also serve as a powerful tool for retaining the best and brightest in an industry. When employers and employees enter into this type of contract, both commit to investing in a mutually beneficial relationship. Non-competes also serve as a bargaining tool during the hiring process. Many potential employees have used the request to sign an agreement as leverage for a better job offer.

Non-compete contracts also play a role in limiting the expense and frustration of dealing with situations that arise once an employee leaves a company. They are an effective and more affordable way to prevent the loss of trade secrets without a protracted legal battle with a former employee. It’s always better to prevent the divulging of information than to deal with the ramifications once a risk arises.

Are Non-Compete Contracts Always Legal?

When structured properly, these agreements are legally binding. They discourage or prevent employees from taking valuable information they’ve accumulated with one employer and using it to benefit their next employer.

However, there are limits as to what an employer can include in a contract.

Contracts should:

  • Address the protection of legitimate business interests of the employer, which includes employee retention or valuable information
  • Be reasonable in scope, duration, and geographical restriction
  • Be supported by consideration. It is within an employee’s rights to ask for better compensation before signing a non-compete contract

Non-compete contracts are not enforceable when they go too far.

If the court feels an agreement would prevent someone from finding gainful employment in their field, the contract is likely unenforceable. Employers must show their contracts are in good faith and reasonable. The court deems it unreasonable to require an employee to sign an indefinite non-compete agreement or that pertains to too expansive a geographical area.

Restrictions cannot be unfair or unreasonable by restricting someone’s ability to earn a living should they leave their current job.

How Can an Attorney Help You with a Non-Compete Contract?

Rules regarding non-compete agreements vary from state to state. This is one of the reasons it’s so important to work with an attorney regarding the creation and enforcement of a contract. Our experienced attorneys can prepare a non-compete contract that is right for a given situation. They’ll also assist you with any concerns about a former employee violating a contract and help you if you believe a non-compete contract is too restrictive.

You’ll need to demonstrate the following if you believe a contract was violated:

  • It is legally enforceable
  • Both sides agreed to its terms
  • That you have proof it was violate
  • That it wasn’t overly broad or too restrictive

Dealing with a violation of a non-compete agreement usually requires a temporary restraining order and/or preliminary injunction. Florida business owners need someone who understands how the laws in the state work. Our attorneys versed in Florida law and can help you deal with non-compete issues that affect your business.

If you are worried about a former employee taking confidential information to a competitor or you’re an employee dealing with a restrictive non-compete contract, we can help. Contact Frese Whitehead & Anderson, P.A., at 321-473-3295 or toll-free at 866-510-7362 for more information.

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