The more trust you place in your employees and the more you invest in their professional development and education, the more damage they can potentially do to your company when they leave your company. A worker could use your secret recipe or proprietary manufacturing process to directly compete with your company. They could steal copies of your client list or try to hire other people that work for your business.
One of the ways employers protect themselves when making substantial investments in individual workers is by requiring that those employees sign a non-compete agreement. A non-compete agreement prevents a worker from leaving a company to go work for a direct competitor and from starting their own business using the information acquired or skills learned at your business.
Can you require that all of your staff members sign non-compete agreements?
Non-compete agreements are not universally enforceable
The use of non-compete agreements has come under scrutiny in recent years. From a federal order expressing concern about the abuse of non-compete agreements to changing state laws, there are more restrictions than ever on employers attempting to limit the future economic activities of their workers.
In Rhode Island, for example, the law changed just a few years ago to restrict the use of non-compete agreements for people in numerous low-paid or low-skill professions. In Massachusetts, the law is the opposite. The state specifically prohibits the courts from enforcing non-compete agreements against certain educated professionals, like lawyers and physicians.
When is a non-compete enforceable?
In some cases, you may be able to get your workers to sign non-compete agreements and enforce them later. To achieve this, the documents need to be appropriate and in compliance with state law. Typically, you will need reasonable temporal and geographic limits for the courts to uphold such an agreement.
An agreement that lasts for three years will be easier to enforce than an indefinite one. You also need to offer the workers something of value in consideration for their confession. A promotion, a new position with your company or even a one-time bonus could be adequate compensation for signing a non-compete agreement.
Protecting yourself as a New England employer requires good contracts and an awareness of state laws.
