A Non Compete Agreement is a vital tool to protect the interests of an employer. Now, what exactly is a Non Compete Agreement? According to the Contract Law, a non-compete agreement is under which ‘one party (usually an employee) agrees not to enter into or start a similar profession in competition against another party (usually the employer).’ It is also known as Non Compete Clause (NCC), Covenant not to Compete (CNC), and Restrictive Covenant.
When Do You Need a Non Compete Agreement?
The purpose of this agreement is to give the employer the assurance that the employee will not imitate, reproduce, or reuse the employer’s skill or technology after the employee has stopped working for the employee.
It is not sufficient enough to know what is a Non compete agreement. You must go through the template of the concerned state before drafting or entering this agreement.
- This agreement interferes with trade fluidity.
- Non-Compete agreement Florida includes all non-compete clauses like the goodwill, customers, trade secrets, confidential information, geographical area, and even specialized training. The non-competition agreement in Florida is based on the reasonability of all terms. You could go through the non-compete clause sample for clarity.
- The non-compete agreement California considers only a few situations that are mentioned explicitly by the statute. All the other non-compete agreements are void in California. California’s non-compete agreement considers only a small segment of limited liability and partnership companies. In short, there are higher chances that your non-competition agreement here will not be enforceable by law. If you are curious to delve deeper into non-compete California, you could take a look at a non-compete agreement sample or a non-compete clause sample.
- The Non-compete agreement New York is enforceable to the extent necessary only when the terms are reasonable. The employee non competes agreement gives the employee the chance to choose between competing and getting benefits. You could read a non-compete agreement sample to know more about the clause. A sample non-compete agreement could help you get a clear picture of the specific provisions of the contract.
- Ohio is a state which sees non-compete agreements as valid and enforceable means by which employers can protect themselves. Are non-competes enforceable? The non-compete agreement, Ohio, is considered binding based upon its reasonability.
- Non-compete agreements are quite common in Pennsylvania. Generally, the employee gets no extra compensation for signing these contracts. Unlike non-compete California agreements, the non-compete agreement PA allows the employers to include this clause as a part of employment contracts.
- This agreement Illinois follows three rules. The non compete clause should not be harmful to the public interest, cause any difficulty to the employer or employee. It should exist for only safeguarding the scope of legitimate business functioning.
How to Draft the Non Compete Agreement?
This agreement is restrictive, and the legal system does not favor it. So, while drafting an agreement, it should be as unrestricted as possible. You could follow these steps
- Firstly, you should know the state laws concerning the non compete clause.
- States who consider this agreement valid enforce them only after due considerations.
- You should use this agreement reasonably only for those employees where your company’s unique skill set can be jeopardized.
- Be very specific while framing the agreement regarding the length, time frame, geographical restrictions, and consequences.
The key terms of this agreement should include the duration of the non-compete clause, geographical restrictions, compensation, and the type of market or business he has been restricted.
Benefits of Non Compete Agreement
If prepared and followed judiciously, this agreement can turn out to be beneficial to both parties.
Pros
- It helps the employer to safeguard his unique skills and trade secrets.
- The companies can work best in their efficiencies without hesitation.
- The employee gets an opportunity to learn core skills and techniques.
- Those who abide by the agreement gain benefits.
Cons
- These agreements are generally not favored by the court.
- The contract should be reasonable. It means that the employee should be concerned with the
What Happens in Case of Violation?
You should have a clear understanding of precisely what are the consequences of violating a non-compete clause. In case of violation of this agreement, the court takes the decision. If the court finds the employee guilty, then he has to either give financial compensation or is debarred from work for the duration specified in the clause.
There are four types of non-compete agreements. A non-compete one is where the employee is restricted from working in a similar company. Non-solicitation of customers, non-solicitation of employees, and non-disclosure deals with restrictions to the company’s clients, other employees, and information, respectively. You could go through a sample agreement since different states have a different set of rules included in this agreement. For example, a non-compete California is entirely different from that of Pennsylvania. However, all these agreements should aim for facilitating and not restricting trade.
Sample Non Compete Agreement
Non compete agreement template can be downloaded from below.
