Friday, January 29, 2010

Non-Competition Covenants

When an employer hires an employee, they are often concerned with what might happen if that employee was to leave and work for a competitor or start a competitive business. Quite often, employment agreements will contain non-competition covenants which stipulate that, upon termination of employment for any reason, the employee agrees not to compete with the employer within a certain georgraphic region and a certain period of time. Difficulties can arise where these covenants are too broad, and not necessary for the reasonable protection of the employer's interests. Sometimes these covenants are entirely unenforceable. A good question to ask yourself, as an employer, is: can I reasonably protect my business by using a confidentiality clause (employee agrees not to disclose any confidential information of the business) and a non-solicitation covenant (employee cannot solicit the existing customers or prospects of the business). If your interests can be protected using these means, it may make sense to draft your employment agreement accordingly. Having an agreement that is both reasonable and enforceable makes good business sense.

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