What are the Basics of Non-Compete Agreements?
Non-compete agreements protect employers from losing valuable trade secrets, customer contacts, and other forms of intellectual property. A trade secret is information that confers an economic benefit to a business because it is not generally known or readily learned by others. When an employee, who has obtained trade secrets during employment, quits or is fired, he/she could use this confidential information to compete with his/her former employer. The employee might start working for a competitor or open a competing business, and gain an unfair advantage by abusing confidential information about their former company’s business operations, trade secrets, client lists, or marketing strategies. A properly drafted non-compete agreement can help prevent this from occurring and provide an employer with additional legal remedies.
Elements of a Non-Compete Agreement
In a non-compete agreement, the employer agrees to provide specialized training or divulge confidential and proprietary information to the employee. In return, the employee typically promises not to work for a competitor for a certain time period, recruit employees, service or solicit the former employer’s clients, disclose or use the confidential information during and after employment. Breach of these terms can lead to non-competition litigation.
Non-Compete Agreements Disfavored?
Originally, non-compete agreements were disfavored as unlawful restraints on trade. Courts focused on the importance of a free market in our capitalistic economy. Our legal system highly values a person’s right to earn a living. However, the law recognizes that an employer’s interests may warrant restrictions on post-employment competition.
Non-Compete Agreement and Business Litigation
Our business litigation trial team handles a broad range of business disputes and commercial litigation, including:
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