Ensuring employees have a complete and thorough knowledge of your small business is critical to the success of your company. The last thing you want, however, is for your employees to share this inside information with competing companies.
When used properly, a non-compete agreement can protect classified business information from such a situation. Non-compete clauses help to prevent former employees from working for or sharing information with competing companies. They also keep former workers from starting a similar business using valuable business information.
When is a non-compete clause needed?
As a business owner, you may have invested valuable money and time into developing your business plan. If you have information that may directly hurt your company if shared with a competitor, you may benefit from a non-compete agreement. These clauses can protect information, including trade secrets, intellectual property, marketing plans, processes and procedures, research and development, client lists and confidential technology.
Non-compete clauses may be advantageous if you employee contractors as well.
What should you include in a non-compete arrangement?
Your agreement must be complete and concise to ensure the validity of your document. The agreement may not be legally binding if the contract is missing a key detail. Make sure your non-compete clause contains the following:
- Reason the arrangement is needed
- Effective date and the length of the agreement
- Names and addresses of all parties involved
- Geographic area restriction
- Duties or activities restricted
It is important that your contract is fair and reasonable as well.
Having a non-compete agreement in place may give you peace of mind that your business’s critical information is protected.