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What are the benefits of using non-compete agreements?

On Behalf of | May 10, 2022 | Business Law |

As someone running a business, you know what your trade secrets are. You know how you run your business and what satisfies your customers. You also know that if your competitors get ahold of your secrets, they could push you out of the market.

That’s why it’s so important to you that your staff members do not share any proprietary information about your business with others. You want to know that they won’t go work with a competitor too closely to when they have left your employment, either.

Is a non-compete agreement a possible help in this situation?

Non-compete agreements prevent employees from taking roles that compete with your business. Usually, they specify which types of roles they may not go into or which companies they cannot work for. You might also set regional restrictions. For instance, you may say that you don’t want them working within 200 miles of this business in the same industry.

If you decide to have a non-compete agreement, it is essential that you make sure it’s legally binding and fair to the employee. A strict non-compete agreement, if challenged, could fall apart in court if it’s too restrictive.

What determines the validity of a non-compete agreement?

Generally speaking, whether or not a non-compete agreement is valid will depend on the jurisdiction and state you’re in. There may be specific limits on how long a non-compete agreement can be enforced, too. For example, you might want a five-year limit, but only a one-year limit may be allowed.

Massachusetts has several bans on non-compete agreements, too. For example, there are no non-competition agreements allowed in professions including:

  • Nurses
  • Social workers
  • The broadcasting industry
  • Lawyers
  • Psychologists
  • Physicians

So, if your company wants to put a non-compete agreement in place, you do need to find out more about the specific laws that may apply to your business. In some cases, you may not legally be able to have a non-compete agreement. Nondisclosure agreements, in that case, could be a better option for your company, since you can still ask that no trade secrets are shared with your competitors.

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