A newly hired employee is trained by their employer and provided valuable resources to ensure his or her success in their new job. Employers invest money and time in their hires, and depending on their work description, they also share business strategy, client information and confidential information with employees. Even existing employees participate in continuing education at the cost of their employer. Given all this investment in their training, it makes sense that California residents would like to protect their investment and prevent employees from working with competitors. A noncompete agreement is one way to achieve this.
What is a noncompete agreement?
An employer and employee enter into this agreement, whereby an employee is prevented from working for a competitor for a certain period of time after leaving their current employment. The employer wants to prohibit the employee from coming into direct competition into them, either by joining another company or by beginning their own business in the same field and taking other employees with them. The agreement can also use language preventing the employee from taking trade secrets or other sensitive information, such as pricing, strategy, methods, ideas, and future products with them when their job ends.
What should a noncompete agreement include?
In order to be enforceable, a noncompete agreement should be fair and reasonable for all parties involved. Reasonableness means that the terms of the agreement itself should be fair, depending on the type of job it is. Additionally, there should be specific dates during which the employee cannot work in a competitive sense and there should be a specific and limited geographic area covered by the agreement. There should also be a reason for enacting the agreement.
A noncompete agreement is enforceable as long as it is reasonable, clear and realistic. Employer wishing to protect their businesses, their investments and avoid business litigation may want to consult an experienced attorney for guidance on how to proceed.