To Use or Not to Use Non Compete and Confidentiality Agreements

Pro Arguments
"They protect the company’s legitimate business interests." They can, but enforcement is no easy matter. The company must be dedicated to consistently enforcing these agreements. A well-written agreement and the use of experienced legal counsel in this area are the company’s best deterrent and resources. Injunctions prohibiting further violations are usually what a company can expect in the form of help from the courts.

Con Arguments
"They (the agreements) send the message that you do not expect the employee to be 'long-term.'" That may be true, but what is the reality? The agreements are designed to protect the company’s legitimate business interests so that it may continue to thrive without undue harm. Any employee who leaves the company, not just the newly hired employee, could adversely affect the company’s future, as well as the future of all other remaining employees, by violating the terms of the agreement.

"They do not prevent unhappy employees from leaving the company." True, but that is not the business rationale for having non-compete, confidentiality, and non-solicitation agreements. It is to protect the company’s legitimate business interests, such as customer good will, marketing plans, etc. Employers who have "unhappy" employees need to address their concerns through proactive management practices.

"They deny an individual’s opportunity to earn a living in their chosen profession." Only if the agreement is overly broad and restrictive, which will likely make them unenforceable.

"They are not enforceable." It is true that non-compete agreements are not enforceable in some states. However, that doesn’t mean your company should not take steps to protect its legitimate business interests by using confidentiality and non-solicitation agreements.

Published on Wednesday, December 21, 2005 (updated 05/28/2014)

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