Protecting Your Business with a Non-Compete Covenant

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Most Common Business Law Issues:

What Is a Non-Compete Covenant?

A non-compete covenant, non-compete clause, or covenant not to compete is a provision that prevents a former employee from working for a competitor or opening a competing business for a specified period after leaving the company.

These provisions are found in employment contracts and can protect companies':

Do I Need a Non-Compete Covenant?

Most courts require a “legitimate business interest” for a non-compete covenant. The agreement must not simply punish the employee for leaving or aim to prevent normal competition. Non-compete agreements are common in the technology and sales industries, where protecting confidential information and customer relationships is key.

What Criteria Must Be Present in a Non-Compete Covenant?

In order for a non-compete covenant to be enforced, the agreement must be reasonable. There are several criteria that should be present to make it easier for courts to enforce a covenant not to compete:

Should I Consult an Attorney?

An experienced employment attorney can help draft a covenant not to compete or negotiate the terms of the agreement. An attorney can also advise on your right to sue an employee for breaching a covenant not to compete.

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Last Modified: 07-24-2014 12:31 PM PDT

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