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Does creating a non-compete agreement suit company interests?

Running a business can take up a large part of an owner's life. Because of this, you certainly want to do your best to ensure that no unnecessary hardships befall your company. Many owners have this goal, and you may be among those who choose to use certain contracts to help keep business relationships clear and to protect company interests.

One type of contract you may feel compelled to create is a non-compete agreement. This document could make sure that your employees cannot work for a competitor or create their own competing business for a certain amount of time after ending employment with your company. However, in order for this type of agreement to be enforceable, you must use the correct terms.

Protecting your business interests

If you plan on using a non-compete contract or clause, you need to make sure that it will truly protect your company's interests. If you simply create this type of contract to cover bases that may not exist, a court could find the agreement unenforceable. On the other hand, if you can show that the restrictions would keep your trade secrets, client lists and other confidential information safe, you may have legitimate cause to create this type of contract.

Of course, while you use this agreement to protect your business, you also need to recognize that the restrictions place some burden on your employee. As a result, you may need to offer existing employees incentives in return for signing the non-compete agreement. In many cases, employment itself can act as that incentive if the individual is new to the company. However, if you later choose to have already-hired employees sign an agreement, you may need to provide some other benefit, such as a pay raise or promotion.

Maintaining reasonable terms

While your business interests likely remain more important to you than your employee's ability to find other work, you still need to ensure that the terms of the non-compete agreement remain reasonable. You cannot simply include broad terms that keep an employee from working in a general position for an unreasonable amount of time. Instead, you may want to ensure that the restricted position pertains to your company's industry in the area in which your company faces competition and for a reasonable amount of time.

If you want to make sure that the terms of your non-compete agreement remain enforceable, you may find it useful to have a legal professional review and draft your agreement. This step may help prevent issues that could later cause former employees to challenge the contract.

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