Advantages And Disadvantages Of Non Compete Agreements

Nowadays, more employers require new workers to sign “Non-Compete Agreements”, in order to prevent insiders from taking consumers’ data, business secrets or newly researched technologies to competing firms when the workers leave. A non-compete agreement is a contract between an employee and employer that confines the ability of workers to involve in business which competes with their current employer. The agreement is most often signed at the beginning of employment. It puts a limit on the employee to not work for a competitor company immediately after leaving their employment with the current company.

According to Paul Greco, counsel at the law firm of Buchanan Ingersoll & Rooney, although non-compete agreements were primarily aimed at the

Also, due to the agreement, employees will not leave as quickly, therefore protecting the investment the employer has put into the employees.

The cons from employers’ perspective:

• Having a non-compete agreement might accelerate an employee decision to leave the company.

• Non-compete agreement might increase the risk of the company to be involved in a legal battle. For example: The battle may be over the restrictions of the agreement being too broad.

• Legal courts might not like unfair non-compete agreements which constrain an individual’s right to work. Even if the non-compete agreement was clearly violated, this can make employers difficult to win the court battle.

• In many cases, non-compete agreements may be seemed to be unnecessary since confidentiality and related clauses may already prohibit using any proprietary information in the future. Initiating a non-compete agreement could cause unnecessary apprehension among employees and reduce employee satisfaction without actually improving employer

This is not necessarily standard, but it may be able to be negotiated in some cases.

• The other terms may be negotiable as well. Each topic—the length of time, the geographic scope, the compensation, and the defined competition—might be a negotiating point that makes the agreement more palatable. Employees may also try to negotiate that the agreement should be voided if the employee is terminated, thus reducing the risk.

The cons from the employee perspective are:

• When facing a request to sign a non-compete agreement, an employee may need to seek legal assistance, which often comes with costs.

• Especially in specialized industries, it may make getting another job much more difficult. This is especially true if the terms are broad. And it often does not matter whether the employee left by choice. This point is of critical importance, and it is, in fact, a reason some employees may choose to not sign such an agreement, even if it means walking away from a potential job—they do not want to put their future work prospects on the line.

In addition, a non-compete agreement should clearly answer these questions