Noncompetition and nondisclosure agreements are becoming more prevalent in many businesses and professions. Potential or current employees should pause and carefully consider these clauses when they are offered in an employment contract or at another time.
Through a noncompetition agreement, an employee agrees not to directly compete with their former employer for a reasonable time period and within a geographic area. A nondisclosure agreement restricts a person from disclosing information in subsequent jobs that their former employer classified as proprietary or confidential such as technology, new products, business plans, finances and sketches.
These agreements are intended to protect a company’s investment in an employee, and from it being used in competition against it. These are intended to prevent an employee from using their time with a company to learn about and gain experience in a career and use it to start their own business or help a competing company.
For applicants, deciding whether to sign a non-compete depends on how much they desire the new job. They should also consider whether its terms, particularly its length and time, are reasonable. A noncompetition can keep an employee from engaging in their chosen profession, especially if it is unreasonably constricting.
Enforcement of these agreements usually depends on the reason that the worker is leaving employment. Employers will be more likely to enforce a non-compete if the employee is leaving for a better job opportunity with a competitor or to set up their own similar business. If a worker is being laid off or terminated, an employer may be more willing to provide some more flexibility on the terms of the agreement.
Non-competition and non-disclosure agreements may have long-lasting consequences. An attorney should carefully read them and negotiate its terms.