Non Compete Clause

So, you’re in the process of hiring a new employee. That’s great. Have you given some mediationthought to having a contract with a non compete clause?

In contract law, a non-compete clause (often NCC), or covenant not to compete (CNC), is a clause under which one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer). Some courts refer to these as “restrictive covenants.”

These legal contracts prevent employees from entering into markets or professions considered to be in direct competition with the employer.

Why Employers Use Them

Noncompete agreements are enforced when a relationship between an employer and employee ends and the employer wishes to prevent the employee from competing against them in their next position, whether working for a competitor in the same market or starting up another business in the same field. Consultants and independent contractors who terminate their relationships with companies often are subject to noncompete clauses to avoid competition after the separation.

Employers also may seek noncompete agreements to protect themselves against former employees revealing secrets or sensitive information about operations, clients, customers, formulas, pricing, strategy, salary, methods and practices, ideas, future products, or public relations and marketing plans.

Duration

A non-compete agreement is typically in effect for a certain period of time after employment ends. It is important to determine these dates well in advance and to seek legal counsel, as employers can set noncompete agreements only within a realistic timeline and cannot permanently prevent former employees from furthering their careers in that field.

Legal Validity

There sometimes are challenges to whether non-compete agreements are legally binding. There isn’t a simple answer. It varies from case to case and can depend on state law, on how restrictive the agreement is in terms of time and the radius of the region, and on what the employer construes as competition.

Noncompete agreements usually are considered legally binding as long as they have reasonable limitations, such as clear, realistic regions where employees may or may not work, or an exact amount of time that must pass before an employee may commence work in the field again.

However, the validity of non-compete agreements varies by state. Some states, such as California, North Carolina, and Oklahoma, disregard these agreements altogether, while others pick and choose which careers prove more risk for a company and, therefore, can be subject to such an agreement.

Perhaps you should come in and talk to Ben Winter. Ben Winter, P.A. provides legal services to businesses in the Tampa Bay area. For more information, go to our web site www.benwinterlaw.com or call (727) 822-0100.

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