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How do noncompete agreements benefit employers?

| Dec 21, 2020 | Employment Law |

New York business owners have most likely worked hard to develop their business, from fostering clients, creating products, investing in their talent and training, and financing extensive research. The primary reason they do is to gain a competitive edge in their sector, but this can all be lost if an employee misappropriates their proprietary information or steals their client. One way to ensure their information remains protected is by signing a noncompete agreement with their employees.

What is a noncompete agreement?

Noncompete agreements are generally included in an employment contract. Through these, employers promise to hire someone in exchange for their commitment that they will not participate in competitive businesses while they are employed with their employer or after their employment ends.

A noncompete agreement restricts an employee from engaging in directly conflicting employment and is valid for a short period of time and is limited to a specific geographic location.

Potential problems with noncompete agreements

A noncompete agreement is created by the employer and is signed before the employee begins working. Unfortunately, these agreements are not always enforceable.

First of all, the restrictions with regards to the time period and location should be reasonable. Courts consider the legitimate business interests of the employer and the market is narrow or broad. For example, an agreement that limits a former employee’s ability to work in the industry in the whole country for 10 years is likely going to be restrictive, while one limiting someone’s employment in the same state for six months might be enforceable.

While a noncompete agreement may be beneficial for employers trying to protect their proprietary information and business interests, it is of no value if it is not enforceable. Employers should have their employment contracts reviewed by an experienced attorney to ensure the provisions are fair and enforceable in a court of law.