A non-compete agreement is a contract between you and an employee in which the latter agrees not to work for a direct competitor of yours within a certain geographic region for a certain amount of time upon the termination of his or her employment. According to the American Bar Association, the inclination of the courts is to invalidate or limit non-compete agreements. Nevertheless, they are important to protect your legitimate business interests.
Courts are more likely to enforce a non-compete agreement that places reasonable limits. There are provisions that you should include in your non-compete agreement to make it more acceptable to the court.
1. Attorney’s fees
Your non-compete agreement should include a provision saying that, if you should ever have to litigate it in court, whoever loses should have to pay the attorney’s fees for the winning side. This could help your employees take the agreement more seriously as attorney’s fees can be very expensive.
2. Savings clause
It may be that the court takes issue with one particular clause in your non-compete agreement. A savings clause says that even if the court invalidates one clause of the agreement, the rest of the contract is still in effect.
3. Injunctive relief
A breach of a non-compete agreement could result in irreparable harm to your company. Therefore, your non-compete should provide injunctive relief as a remedy to a breach. Injunctive relief is a court order requiring another party to stop doing an act that harms you. In the case of a non-compete agreement, injunctive relief could mean that your former employee has to give up his or her job with your competitor.
Your agreement should also state explicitly that there is a presumption that your employee consents to injunctive relief by signing the non-compete agreement.