If your business depends on its intellectual property and proprietary information to maintain a competitive edge, it’s important to protect these assets whenever possible. In many cases, the best way to do that is to ask your employees to sign a non-compete agreement.
Employee “poaching” means that for the right price, one of your valued employees could be lured away by another company, taking even more valuable information with him. A non-compete agreement is a way of making sure that this doesn’t happen.
Oftentimes, non-compete agreements have provisions saying that an employee will not work for a competitor for a certain period of time after leaving the company or will not work for a competitor within a certain geographical proximity. Intellectual property developed by that employee may also be protected if it was developed on company time and for company purposes.
Will all of this in mind, it is important to note that there are times when non-compete agreements simply do not make sense. Yet some companies are including them as a standard provision in most employee contracts. Earlier this month, news sources reported that the sandwich chain Jimmy John’s puts non-compete clauses in employment contracts for workers who assemble sandwiches.
For the most part, a job like this is low-skill and low-pay. Moreover, there is seemingly no intellectual property to protect. Thankfully, there’s no evidence to indicate that Jimmy John’s has ever tried to enforce its non-compete agreements. Bringing litigation to enforce it would likely be too expensive and time-consuming to be worth it. So why include the non-compete agreements in the first place?
If you are asking your workers to sign non-compete agreements, chances are that you have more to protect than sandwiches. Still, non-compete agreements are often challenged, which is why you need to make sure your written agreement is worded in such a way as to be enforceable in court. You should also work with an experienced law firm who knows how to protect these agreements when employees breach them.
Source: The New York Times, “When the Guy Making Your Sandwich Has a Noncompete Clause,” Neil Irwin, Oct. 14, 2014