Non Compete Clause: Good or Bad
Non Compete Clause: Good or Bad
BUS 311
Nicki Hebert
James Slack
July 25, 2011
Non-compete agreements are a particularly important issue in today’s business world. Three trends that make non-competes especially important in the current business environment are a change in the definition of competition, the lack of employee loyalty, and the importance of relationship-based selling. As long as these agreements are done according to state law, they can be enforceable in the court of law. Any company that believes it has a competitive lead should consider using non-competes to protect themselves from employees who can walk out the door with their trade secrets. Many businesses today require employees to sign non-compete clauses when hired to protect the company, but it can have many negative effects for the employee as well.
Non-Compete Agreements are contracts between an employer and employee. Employees promise not to take what they learn while working for you and use it against you while working for a competitor. A typical non-compete agreement states the employee agrees not to work for rivals, solicit business from current clients, or otherwise compete with you for some period, such as two years, after leaving your company. Key principles that almost all states go by when it comes to non-compete clauses are reasonableness rule, independent consideration, duration, distance, blue pencil rule, and liability for new employers.(lawyers.com) All of this is done so that way the company is protected from anyone trying to steal important trade secrets to share with their new employer.
The company that I currently work for has a non-compete clause. It states that I cannot work for another payday loan company one year from the date of termination and I cannot open a similar company in any town in the state that I work. There is even a part in the clause to where you could not open, manage, operate, finance, or even be associated with another company like
BUS 311
Nicki Hebert
James Slack
July 25, 2011
Non-compete agreements are a particularly important issue in today’s business world. Three trends that make non-competes especially important in the current business environment are a change in the definition of competition, the lack of employee loyalty, and the importance of relationship-based selling. As long as these agreements are done according to state law, they can be enforceable in the court of law. Any company that believes it has a competitive lead should consider using non-competes to protect themselves from employees who can walk out the door with their trade secrets. Many businesses today require employees to sign non-compete clauses when hired to protect the company, but it can have many negative effects for the employee as well.
Non-Compete Agreements are contracts between an employer and employee. Employees promise not to take what they learn while working for you and use it against you while working for a competitor. A typical non-compete agreement states the employee agrees not to work for rivals, solicit business from current clients, or otherwise compete with you for some period, such as two years, after leaving your company. Key principles that almost all states go by when it comes to non-compete clauses are reasonableness rule, independent consideration, duration, distance, blue pencil rule, and liability for new employers.(lawyers.com) All of this is done so that way the company is protected from anyone trying to steal important trade secrets to share with their new employer.
The company that I currently work for has a non-compete clause. It states that I cannot work for another payday loan company one year from the date of termination and I cannot open a similar company in any town in the state that I work. There is even a part in the clause to where you could not open, manage, operate, finance, or even be associated with another company like
References: http://labor-employment-law.lawyers.com/employment-contracts/Non-Compete-Contracts. Retrieved February 20, 2011 http://www.legis.state.la.us/lss_doc/lss_house Collins, J. Steven (2004). Buy Out Clause Saves the Day; Non-Compete Enforced. Retrieved February 26, 2011. http://www.bcjattorneys.us/dotnetnuke/tabid/86/Default.aspx Liuzzo, A. & Bonnice, J. (2007) Essentials of Business Law (6th ed.). New York : McGraw-Hill/Irwin. Pratt, Mary (April 23, 2009). Don 't sign away your future: Noncompetes done right. Retrieved February 25, 2011. http://www.computerworld.com/s/article/9131622 Anderson, S., Fogle, R., Pattison, G. (February 17, 2011). Non-Compete is Non-Competitive. Retrieved February 25, 2011. http://spin.atomicobject.com/2011/02/18/non-compete-is-non-competitive