Successful businesses want to protect their proprietary information, whether it is a “secret ingredient” or a customer list. Many companies seek to achieve this goal by requiring that all employees sign a uniform “non-compete” agreement in an effort to reduce the risk of economic harm when the employment relationship ends and an employee goes to work for a competitor. Businesses often are surprised, however, to learn that the agreements that they were counting on for protection will not be enforced by a court. This unpleasant result can be avoided through careful drafting up front. The key to drafting an enforceable agreement is to remember that there is no “one-size-fits all” document. The laws governing non-compete agreements vary from state to state, and understanding the nuances among the states will help attorneys with the drafting process.
Most non-compete agreements are composed of several different provisions, each with a particular purpose.
