I Need a Quick Non-Compete Agreement …
Common HR Questions
Question: “Hello MEA hotline… I Need a Quick Non-Compete Agreement …”
Answer: Sorry, but no. A non-compete is not a one-size fits all document that can be ordered up over the Hotline. You can start with one of a variety of standard forms that lawyers usually maintain for different situations, but in order to create the maximum likelihood that it will be enforceable and that it will do what you want it to do, you cannot stop there.
Some important points:
- Before even considering the legalities, the practicalities must be analyzed: it does no good for an employer to draft a non-compete agreement that employees will not be willing to sign. The non-compete agreement must first be analyzed from this perspective.
- The law requires that a non-compete agreement must serve a legitimate business interest of the employer in order to be enforceable. In other words, there must be a very good reason for imposing the non-compete on the employee, and you will need to able to prove it.
- In respect to both of the prior points, consider what flavor of non-compete you want. For instance, in some circumstances, it may be appropriate to bar an employee from any employment with a competitor; in other circumstances, it may be appropriate to allow an employee to take a position with a competitor, but to bar contact with the former employer’s customers. There are other alternatives and nuances to consider.
- A non-compete agreement must be reasonable in terms of its duration and geographic scope – easier said than done in many situations.
- When the non-compete was entered into (for instance, before employment commenced, after employment commenced, before a raise or stock option was offered …) can be crucial to enforceability…
- Different stated have different rules.
*Provided by Michael Kulakowski, attorney at Powell Trachtman
MEA’s goal is to provide current, detailed and useful information to expert hotline callers, but our responses do not constitute legal advice about what you should or should not do in a particular situation. You should always consult legal counsel, in the context of a confidential attorney-client relationship, before taking any action that could have legal implications for you or your business. If legal services are needed, MEA members are entitled to a discounted fee arrangement with the Powell Trachtman law firm, which serves as MEA’s general counsel. For more information, contact Michael G. Trachtman at firstname.lastname@example.org.