3 tips to draft an enforceable non-compete agreement

On Behalf of | Oct 20, 2022 | Business Law |

Asking your employees to sign a non-compete agreement can help protect proprietary and confidential information. An employee who signs a non-compete agrees not to work for any of your competitors for a certain amount of time.

According to the American Bar Association, courts are likely to overturn a non-compete if they can find cause to do so. Here are some tips to help your non-compete agreement stand up to scrutiny.

1. Choose a small geographic area where the non-compete is effective

A court is unlikely to uphold your non-compete agreement if it extends over too broad a geographical area. Similar companies to yours that operate far away probably are not in direct competition with you. Therefore, it is not reasonable for you to ask former employees not to take jobs with similar companies outside of your city or state.

2. Make a closed-ended agreement

A non-compete agreement that is open-ended, meaning that it remains effective in perpetuity, is not reasonable. Therefore, the court is unlikely to enforce it. You should make your non-compete effective for the least amount of time required to protect your business.

3. Be judicious about whom you ask to sign the agreement

Only the employees that have access to your proprietary information should have to sign a non-compete agreement. Support staff, such as administrative assistants, should not.

Furthermore, you should only ask employees to sign non-compete agreements upon initial hire. You should not ask existing employees to sign non-compete agreements retroactively, nor should you make their continued employment contingent upon it.