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Non-Compete Agreements for Employees

Sometimes when dealing with employees it is important to have binding non-compete agreements to protect your business’ customers, trade secrets, and inventions. Non- compete agreements are also known as confidentiality or non-disclosure agreements and protect trade secrets and information that allows your business to operate profitably.

Employees need access to this sensitive information to make your business run smoothly on a daily basis. However, as a business owner you should also be cognizant of the need to protect your business legally in the event that one of your employees leaves after learning knowledge about your customers, trade secrets, or inventions.

When using non-disclosure agreements it is important to consult with your local Burlington Country business lawyer to ensure the agreements you are entering into with your employees will be effective in protecting your business. This is best done by defining what information is to be protected, the time period, and the potential penalties for violating the agreement.

Defining the Information to be Kept Confidential

Defining the information to be the subject of the non-compete or to be kept confidential is essential to drafting an effective non-compete or confidentiality agreement. Sometimes it is advisable to draft broad language into such an agreement. However the risk with this approach is that the agreement will be difficult to apply to particular situations and be found void for vagueness. This would obviously not be the ideal result, and mean a waste of time and money.

There are two alternative approaches that may be better suited to creating strong non-compete/confidentiality agreements. These are to describe the information or activity restricted very specifically and to mark documents as confidential. However, describing the specific activity or information in great detail could lead to inflexibility that could leave your business exposed to activity or information not foreseen to being used properly outside of an employee confidentiality agreement. Marking particular documents or information as confidential could also be problematic if the employees are marking the documents and forget to do so on a particular document.

Unconscionability Risk of Non-Compete Agreements

There is also a risk that agreements made between your business and its employees can be found unconscionable if not created for a specified period of time. An agreement is unconscionable if it is made between two parties of unequal bargaining power and the terms are inherently unfair to the weaker party. The fact that your business is an employee’s source of income puts them in a weaker bargaining position. A term specifying unlimited or extremely long period could be considered inherently unfair and render a non-compete or confidentiality agreement unfair to the employee.

Help with Non-Compete Agreements in NJ

It is essential to ensure that any contract your business makes is not void for vagueness or unconscionable. This will help to protect your business by making contracts that are well drafted and enforceable. To make sure this happens it is important to consult with your local Moorestown business attorney when drafting any agreement with respect to your business.