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What restrictions can you include in a non-compete agreement?

On Behalf of | Nov 1, 2022 | Business Formation |

One way that you may decide to protect your business is by having your employees sign non-compete agreements. You can do this when they first start with the business, or you may ask existing employees to sign one after the fact.

A non-compete agreement is supposed to keep your employees from quickly going to the competition or starting businesses to compete with you, thus protecting your company and allowing you to train employees without worrying that you’re just training your own competition. But some restrictions are often necessary:

How long does it last?

For instance, one common restriction that you’ll find is that the non-compete agreement only lasts for a certain amount of time. It could say that the employee can’t work for the competition for a year, for example. This way, you know that they’re not going to quickly leave your business just to take their expertise elsewhere, but the noncompete agreement also isn’t hindering them from pursuing their career.

Where does it apply?

You may also have to specify where the non-compete agreement applies in a geographical sense. If someone moves to a different area, then it might not make any sense for your business to have a non-compete agreement. 

That would be unfair to workers, giving a former employer too much say in their future. But it would make much more sense to prohibit that employee from working for businesses within the same city, at least for a time.

Setting it up

It’s very important to get these types of legal agreements correct in advance so that they stand in court when they’re needed. With the right legal help, you may have a sound non-compete agreement laid out.