Generally speaking, an employer can restrict an employee’s post employment competition through a non-competition agreement. Typically, this type of business agreement bars an employee from working for another business that is in competition with the former employer, in a certain geographic area for a set period of time after the termination of the employment relationship. Employers seeking to prevent employees from competing after their termination must carefully draft non-competition agreements to fit within limited parameters. An experienced Monmouth County business lawyer can help guide you through the complicated process of drafting an enforceable non-compete agreement.
Consideration Needed for Employer to Require Employee To Sign
For an employer to require an at will employee to sign a non-compete agreement, he or she must provide consideration for the agreement. This consideration can be in the form of a bonus, payment or other incentive in addition to an employee’s salary or hourly compensation.
The non-compete agreement must also be reasonable in terms of the breadth of the acts of the employee that are prospectively limited. The non-competition agreement must restrain no more activity than is necessary to protect the legitimate business interest of the employer. Often, courts have declined to enforce agreements that vaguely prohibit competitive activity or prohibit employment in any capacity for a competitive enterprise. In addition, courts have also refused to enforce agreements that prohibit activity unrelated to the work the employee preformed for the former employer.
Employee Misconceptions of Non Compete Agreements
It is often the case that employees assume that if the employer lays them off or otherwise involuntarily terminates them that the employer cannot seek to enforce a non-compete agreement the employee previously signed. However, this is not the case. Unless the contract explicitly states that it is only enforceable in the event of the employee’s voluntary termination, the employer can seek to enforce a non-competition agreement, even in cases where the employer terminated the employee.
Contact A Monmouth County Business Attorney
Courts will generally uphold narrow, concise and well written non-compete clauses; it is important to draft them with care based on an examination of your business’s current situation, but also to consider where your business will be in the future. It is best to rely on a competent, professional attorney when drafting theses agreements. More information about creating non-compete clauses and restrictive covenants on which you can later rely, contact a Monmouth County business attorney.