Components of Non-Compete Agreement
Non-compete agreement help businesses protect their interests when an employee leaves.
1. Duration: This part of the agreement says how long the non-compete will last after you leave the job.
For example, it might say you can’t work for a competitor for one year. This time period needs to be reasonable. If it’s too long, a court might say it’s unfair and not enforce it.
2. Geographic Scope: This section tells you where you can’t work after leaving the job. It could be as small as a single city or as large as multiple states.
For example, if your company mainly does business in New York City, the non-compete might only cover that city. The area has to make sense for the business and not be too wide, or it might not hold up in court.
3. Scope of Restricted Activities: This part explains what kind of work you’re not allowed to do. It might stop you from working for a competitor, starting a similar business, or doing certain types of work that could hurt your old employer.
For example, if you’re a software developer, the non-compete might say you can’t develop similar software for another company. This needs to be clear but not so broad that it stops you from finding any job.
4. Consideration: Consideration means what you get in return for agreeing to the non-compete. This could be your job itself, a promotion, a raise, or some other benefit. If there’s no consideration, the agreement might not be legal.
For example, if you sign the non-compete when you’re hired, the job is the consideration. If you’re asked to sign it later, the company might need to give you a bonus or something extra.
5. Confidentiality and Non-Solicitation Clauses: Often, these are included with non-competes. A confidentiality clause means you can’t share or use the company’s secrets or sensitive information after you leave. A non-solicitation clause means you can’t try to take the company’s clients or employees to your new job.
For instance, if you worked in sales, you wouldn’t be able to contact your old clients to bring them to your new company. These clauses help protect the company even if you go to work somewhere else.