In some employment arrangements, a non-compete agreement may be formed between the employer and the employee regarding the worker’s interactions with competing companies. A basic non-compete agreement, or non-compete covenant, usually restricts the working from collaborating or cooperating with other companies while they are working for their employer.
For some businesses, a non-compete agreement may be necessary for the protection of the company’s business plans, trade secrets, and confidential information. It is also a way of ensuring that they won’t lose their employees to other similar businesses. In turn, such agreements can often provide workers with more job security, as they can often bargain for better employment contracts by promising not to work with competitors. Some states may limit or prohibit non-compete clauses in a contract.
What is Contained in a Non-Compete Agreement?
A non-compete agreement is usually part of the employee’s general employment contract. Alternatively, it may be signed as a separate agreement. They are generally treated in the same way as any other contract. Non-compete agreements, or covenants not to compete, usually contain information such as:
- The names of the employer, employee, and other parties.
- The names of companies or businesses that the worker is restricted from working with (some agreements simply forbid work with any other company).
- How long the agreement lasts.
- Penalties or consequences for breaches of contract.
- Lastly, the agreement may also contain specific instructions regarding litigation and lawsuits. For instance, the parties may agree to undergo mediation rather than a lawsuit in the event of a violation.
What Happens if a Non-Compete Agreement is Violated?
In most cases, the breaching party may be required to pay a damages award for losses caused by a breach. For the worker, this could also include losses such as loss of business opportunity or loss of profit if they decide to work with a different company beside their employer’s.
For the employer, a breach usually involves a premature termination of the contract. The remedy for this may also be a damages award to pay for lost wages, and a reinstatement of the worker back to their original position.
Do I Need a Lawyer for Help with a Non-Compete Agreement?
Like any other contract agreement, a non-compete agreement may require the assistance of a lawyer. You may wish to hire an contract lawyer if you need help drafting or reviewing a non-compete agreement. Also, your attorney can provide you with legal advice and representation in court if you are facing a lawsuit that involves a breach of the agreement.