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What makes a non-compete unenforceable?

On Behalf of | Aug 25, 2022 | Business Law Litigation

Part of owning a business is employing staff who can support your company and your mission. Ideally, your employees make your job easier since they can manage some of the tasks that would fall on your shoulders.

During the time your employees work for you, they have access to many of your business’s processes and secrets. If your employees leave, it can threaten your competitive edge.

A non-compete can help you prevent information from getting into your competitor’s hands, but only if the agreement is enforceable. Here are some of the terms that will make a non-compete unenforceable.

Too restrictive

Employees will leave, and they need to be able to find another job. Often, when a court determines that a non-compete is unenforceable, it is because it would force the employee to move far away or completely change their skillset.

When looking at the restrictions you need for your non-compete, you should look at the greatest threats to your business, like your direct competitors. Taking a more targeted approach to a non-compete creates a greater chance that it will be enforceable.

Requiring non-competes from all employees

Similar to the restrictions in your non-compete, you should also carefully consider who needs to sign a non-compete agreement. While your entry-level, low-wage or lower-skilled employees may know some of the methods that set your brand apart, a non-compete may be considered overkill.

Not asking about previous non-competes

Similar to how you expect to enforce your non-compete agreements, other employers plan to enforce their agreements. When hiring employees, you should ask them about prior employment agreements that could interfere with their employment with you.

Hiring someone with a previous non-compete is not limited to being the employee’s problem. Once you hire the employee, it can become an expensive legal issue for you, too. You should consult with a legal professional on the content of the employee’s previous non-compete and consider your options for moving forward.

A non-compete agreement can help you protect your business and its interests. Still, it is essential to draft an agreement that courts will be willing to enforce. You should talk to a skilled professional about the content of your company’s non-compete agreements.

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