Non-Compete Agreements

non-compete agreementsA non-compete agreement is a contract signed by a new employee which states that the employee will not engage in direct competition with his current employer should he/she choose to terminate the current job. It is designed to protect the employer from the employee using the knowledge and or skills learned in his current position to directly compete with the employer through another company offering the same service or product. Non-compete agreements can thus protect the integrity and success of a business. However, used incorrectly, these agreements can open businesses to lengthy and costly litigation.

Specifics Of A Non-Compete Agreement It is only natural to protect your company from being exploited by employees wishing to gain an unfair advantage by draining your company of its uniqueness and competitive edge or from employees sharing sensitive or confidential information to competitors. In the eyes of employees, however, non-compete agreements are perceived negatively for being overreaching and overly restrictive.

Before drafting a non-compete agreement, it is important to understand some key issues about this topic:

  1. Consideration
    Using the “independent consideration” doctrine, a non-compete clause cannot be imposed on an employee, even if they agree to it, unless the employee receives something of value in return for. This consideration would include employment. However, for current employees, signing a non-compete in exchange for continued employment may not be enough. Other benefits like an increase in salary, bonus or promotion may be required. The issue of consideration differs from state to state.
  2. Geographic Coverage
    Agreements with no geographic limitations may be deemed unreasonable or too widespread or unlimited in scope, and be frowned upon. It is recommended that non-compete agreements cover only a specific radius or area.
  3. Time limit
    As with the issue of geographic coverage, agreements with no time limit is frowned upon, and less likely to be upheld in court.
  4. Trade secrets
    The individual trade secrets of a company is what differentiates them from their competitors. Non-compete agreements generally restricts an employee from sharing these secrets with a competitor or the public. Particular attention must be given to underline exactly what is considered a trade secret and what information can or cannot be shared with the public. It is important to specifically address this in a non compete agreement so that your company is fully protected under the law.
  5. Solicitation
    Consideration must be given to prevent ex employees from actively soliciting customers of the former business, or individuals with whom the former employee had personal dealings. Restricting former employees from soliciting prospects or customers with whom he/she had no or little contact is frowned upon, and may be deemed overreaching.
  6. Other Considerations
    Depending on the specific profession of the employee, there may be restrictions on what type of non compete agreements are allowed. Agreements not only vary from profession to profession, different states also have different rules in regards to non-compete agreements.

Drafting A Non Compete Agreement
Some simple tips will help you in drafting an effective agreement:

  1. Put It In Writing
    Make sure this is a document that is executed at the beginning of employment
  2. Be Clear and Specific
    Be sure to spell out specific restrictions, such as what comprises confidential data (business plans, customer lists, etc) and try not leave anything open to interpretation.
  3. Limit Your Agreement
    Remember to put a limit on geographic coverage and time.
  4. Document
    Be sure to include documentation that clearly shows the employee understands the implication of the non-compete agreement that has been executed.

Contact estate planning attorney Greg Robinson at 636-532-9500 in St. Louis to arrange for a FREE initial consultation.

Meet Our Team

Schedule Appointment

Please use the form below to schedule your appointment online. PLEASE NOTE: A member of our staff will contact you to confirm your appointment date/time. Please schedule at least 1 day in advance. Thank you.

Office Location

Gregory E. Robinson, P.C.

1422 Elbridge Payne Rd

Suite #170

Chesterfield, MO 63017

TEL: 636-532-9500

Disclaimer

The choice of a lawyer is an important decision and should not be based solely on advertisements. Neither the Supreme Court of Missouri nor The Missouri Bar reviews or approves certifying organizations or specialist designations.

The information presented in this website by Gregory E. Robinson, P.C. is intended as general information and is not legal advice. You should contact an attorney to learn how the law applies to your specific situation. We welcome your phone calls as well as electronic inquiries.

Use of this web site, communicating through this web site or use of electronic email does not create an attorney-client relationship. Email is not a secure form of communication, please do not send confidential or sensitive information.

The information in this web site is not guaranteed to be correct, complete, or current. We make no warranty, expressed or implied, about the accuracy or reliability of the information at this website or at any other website to which this site is linked.

Images on the site include simulated portrayals of lawyers, clients, scenes and events.

The copyrights in all text, images, screens and other materials provided on this Site are owned by Gregory E. Robinson, P.C., and/or by third parties.