Rules and restrictions with non-compete agreements 

On Behalf of | Nov 17, 2022 | BUSINESS & COMMERCIAL LAW - Contract Disputes

It is certainly true that your business can use noncompete agreements as a way to protect your company. These business agreements usually prohibit people from joining the competition or starting the competition by leaving your company to launch their own.

But don’t assume that a non-compete agreement can say anything that you would like. If it’s not designed properly, it may not be upheld in court. This means that your company doesn’t actually get the protection you expect. As such, you do want to know about some of the rules and restrictions that may apply, such as:

Time limits

For example, the non-compete agreement may have to have a time limit, such as saying that it only applies for the next 12 months. It does help your business to keep employees from jumping directly to the competition, but you can’t control the rest of the person’s career. 

A non-compete agreement that doesn’t specify an end date could be seen as too harmful to their ability to provide for themselves, and the court wouldn’t uphold it even if they signed it.

Geographical limits

Similarly, the geographical limits for the noncompete agreement have to be reasonable and logical. The agreement cannot prohibit the person from working in that industry anywhere in the world, and it typically has to be constrained to the local market. Someone may be prohibited from directly competing with you in the same city, but the agreement may say nothing about taking a job across the state or the country.

If you’re interested in setting up these agreements or working to enforce them, make sure that you know about all of the legal steps you’ll need to take.