How to Write a Non-Compete Agreement for Clients
Non-Compete Agreements
Non-compete agreements are contracts between a company and its employees which ensure that those employees will not compete directly against the company within a set period of time. These contracts are often put in place to prevent competing companies from stealing employees, since the employee would be bound by the non-compete agreement to not take a job within the same field until the time period set by the contract had expired. One of the most famous examples of a non-compete agreement put in place in recent years was seen when Conan O’Brien left the Tonight Show; his contract with NBC wouldn’t allow him to take a job with another network for several months.
If you work in the drafting of contracts, one of the contracts that you may be asked to create from time to time is likely to be a non-compete agreement. Clients want to ensure that their needs are covered in the agreement, but may turn to a professional with more experience in contract drafting than they may have themselves. Fortunately, writing a non-compete agreement for clients isn’t difficult.
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What to Include in Non-Compete Agreements
Though the exact wording of the non-compete agreement you create for a client may vary, there are a few specific things that need to be included in the contract. The two most important of these are the restrictions that are placed on the employee and the length of time that these restrictions will stay in place. The restrictions may include either specific companies that the employee may not work for during the restricted period or types of work that they can’t perform. The length of time the restrictions stay in place is often measured in months from the time that their employment is terminated. Other items that should be included within a non-compete agreement for clients, include an option for the employer to terminate the agreement early and penalties to be incurred if the employee breaks the agreement before the end of the restricted period.
State Considerations
When drafting a non-compete agreement for clients it is important to keep in mind the state in which the client’s company is incorporated. The company will be bound by the laws of that state, and certain states such as Arizona place limitations on the employment type and time period restrictions that can be included in a non-compete agreement. These laws may require that any restrictions contained within a non-compete agreement be reasonable, and only as strict as necessary to protect trade secrets. If a non-compete contract causes harm to the employee or the public at large due to overly-severe restrictions on that person’s employment, then it is likely that any lawsuits brought forth to enforce the agreement will be dismissed when the suit reaches court.
