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Non-compete agreements for small business owners

On Behalf of | Mar 19, 2022 | Business Litigation

Non-compete contracts detail particular parameters and restrictions designed to shield a business from detrimental solicitation, recruiting, disclosure or confidentiality breaches that could compromise the wellbeing and success of the company.

Though these contracts provide additional marketplace security, small business owners are often hesitant to use non-compete agreements for several reasons. Whether they seem unnecessary or excessive, these contracts can do a lot to shield a small company and its interests regarding employee conduct and industry competition.

Non-compete agreements

Agreement terms may vary from employer to employer, but non-compete agreements will generally require that an employee agrees to particular limits as a condition of their employment. When signed, an employee agrees to avoid any action that would compete with the interests of the employer either during his or her employment or after it ends.

Small business protection

A non-compete agreement can take many forms. The reasons for which small business owners should use one of these covenants vary as well. Such considerations include:

  • Confidentiality for customers, clients and business operations
  • Protection of trade secrets
  • Preservation of customer and client relationships
  • Safeguards for investments made in company-specific training and operations
  • Clarification for potential litigation processes

These terms can establish ground rules for employees and deter both individuals and outside third parties from poaching resources from your company.

Comprehensive contracts

In order to ensure a non-compete is legally sound, it must include particular language to designate time limits, regional limits and prescriptive clauses that fall within enforceable legal limits. These contracts should include language that is firm and clear, but that does not unreasonably intimidate employees.

Non-compete agreements should feel straightforward, accessible and strong for both parties, as they are ultimately designed to safely guide and support business practices for all involved.