When you started your company, you weren’t too worried about your employees leaving and working for the competition, or about them learning the ropes and then starting their own businesses to compete against you. Maybe it just didn’t cross your mind or perhaps you didn’t think there was a big enough market for it to matter.
But then it happened. One of your employees left and used what they had learned at your company in a way that had a negative financial impact on your business. As a result, you want to ask your employees to sign non-compete agreements. Can you do this?
You likely need a valid reason for the agreement
You can do this, but keep in mind that the courts don’t always approve of non-compete agreements. They’re wary of business owners using these in such a restrictive fashion that their employees can’t have careers or make a living.
After all, the goal isn’t just to keep your employees from looking for another job. They deserve the right to do that and there are a lot of reasons why they might want to work for the competition. Maybe they get better pay, maybe the other business is closer to their house or maybe the hours work better with their schedule.
So one of the things you need to show when using non-compete agreements is that there is a valid reason. This is why these agreements will often hold up for executive-level positions but not for your day-to-day employees.
With any type of contractual situation with your workers, it’s very important to know why and how to use it, along with looking into whether or not it would even hold up in court.