The Importance of a Non-Compete Agreement

You own a small business and employ a handful of people. Should you require a non-compete agreement. The answer is yes, you should. You will be investing resources (time and money) into the training of any employee. You also have a customer base and other potentially key information that may be crucial to your success. The noncompete agreement is a form of protection against losses. Your company does not wish to invest in an employee only to see the employee take the skills acquired, or the company’s customers, to another employer.

Agreement Rules to Follow

  • Not every employee should be required to sign a non-compete, typically that’s reserved for just the professional staff.
  • Do not attempt to make the geographical constraints of the non-compete so large that it won’t stand up to a challenge in court (your employees have rights too).
  • Make sure you provide any potential professional employee with a copy of the non-compete for them to review before they take the job.
  • Make sure signing the non-compete is one of the first things the new hiree does. Nothing looks worse in a court of law than a non-compete that was signed 6 months after the employee was hired.

Enforcing a Non-Compete

Should you attempt to enforce a non-compete? Of course you should that’s why you created one in the first place. A member of your professional staff has given you their two weeks notice. Schedule an exit interview (yes that is something you should be doing anytime any employee leaves). During the course of the interview discuss the terms of the non-compete agreement. If you’ve structured a fair agreement and they were given ample time to review the terms of the agreement prior to agreeing to become your employee there is no reason why you shouldn’t fully expect them to abide by the terms of the agreement.