When considering a job offer, applicants should consider what could happen if they leave that job. Non-competition and non-disclosure agreements are being used with more frequency in employment contracts and severance agreements, especially in technology-oriented professions.
Employers use these agreements to help assure that their former employees do not compete against them or share knowledge gained from that employer. A non-compete agreement may be used to prevent employees from seeking better opportunities and keeping them in a job that does not offer financial or professional advancement. A non-compete agreement prevents an employee from competing with their former employer for a certain time within a certain geographic area. These restrictions must be reasonable.
A non-disclosure agreement is intended to stop former employees from disclosing information that the employer classified as proprietary or confidential. This includes information about new products, technology, business planning and finances, among other things. These are intended to prevent the employee from sharing this information with new employers and does not prevent them from working for a competitor or on their own.
Several items should be considered when these clauses are presented. These include how attractive the job offer is and whether it is desired. Any restrictions must be reasonable and should not prevent a worker from working for another competitor or on their own for over five years or across the entire country, for example.
Another important consideration is whether an employee wants to work in the same field and within a certain geographic area if they leave that employer. Otherwise, a non-compete can have long-term consequences on professional and personal plans. At job termination, employers may be willing to negotiate more favorable terms for a non-compete if it is part of a severance agreement or may release employees from terms in an existing employment agreement. This is more likely to occur if the termination is part of downsizing, layoffs or where termination is not the employee’s fault.