What Is the Non Compete Agreement

If you`re starting a new job or dealing with a business acquisition, chances are you`ve come across a non-compete agreement. But what exactly is this legal document, and how does it affect you?

A non-compete agreement, also known as a covenant not to compete or restrictive covenant, is a legal agreement between an employer and an employee that limits the employee`s ability to work for a competitor or start their own competing business for a certain period of time after leaving their current job.

The purpose of a non-compete agreement is to protect the employer`s business interests, particularly their trade secrets, confidential information, and client base. By preventing an employee from working for a competitor, the employer is less likely to lose clients or have their confidential information leaked to their competitors.

Non-compete agreements are typically included in employment contracts or as a separate document that an employee signs at the start of their employment. The terms of the agreement vary depending on the employer and the type of industry. For example, a non-compete agreement for a software engineer may prohibit them from working for a competing software company for a year after leaving their job, while a non-compete agreement for a salesperson may prohibit them from soliciting clients from their former employer for a certain period of time.

It`s important to note that non-compete agreements are not enforceable in all states in the United States and that their enforceability varies by jurisdiction. California, for example, has a strict ban on non-compete agreements, while other states allow them but with limitations. Additionally, non-compete agreements must be reasonable in terms of duration, geographic scope, and the type of activity prohibited.

If you`re asked to sign a non-compete agreement, it`s essential to review the agreement carefully and understand the terms before signing. You may also want to consult with an attorney who specializes in employment law to ensure that the agreement is reasonable and enforceable.

In summary, a non-compete agreement is a legal document that limits an employee`s ability to work for a competitor or start their own competing business for a certain period of time after leaving their current job. While the goal of non-compete agreements is to protect employers` business interests, the enforceability and terms vary depending on the state and industry. As an employee, it`s crucial to carefully review the agreement and seek legal advice if necessary.

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